Strong early year demand - and concern over potential future increases - has driven up per-pound selling prices for PET bottle resin and polycarbonate in recent weeks.
The PET market absorbed its second 5 cent-per-pound hike in March, as producers passed on higher costs for raw materials such as paraxylene, purified terphthalic acid and ethylene glycol. Supplies of those materials also were tight in early 2003, industry sources said.
``The second 5 cents is in,'' a California-based PET buyer said. ``[PET makers] don't seem to be backing down.''
While demand in the carbonated soft drink arena - the largest PET end market - remained solid, it again was outpaced by demand in bottled water and ``alternative'' beverages including juices, single-serve milk and bottled teas.
A number of industry observers expect North American market tightness to be somewhat alleviated later this year when 900 million pounds of new annual capacity is brought on, including 600 million from a new M&G Group plant in Altamíra, Mexico. The plant could be running at full capacity as soon as the third quarter. M&G officials said.
In polycarbonate, an average of 12 cents' worth of price increases has taken hold since January. Producers had been seeking as much as 20 cents per pound in increases.
But some processors that are paying the higher prices are not so sure how long the increases will endure. Several said higher prices for North American material make Asian material look more attractive.
North American PC makers ``could be pricing themselves right out of the market,'' a New Jersey-based PC buyer said.
Other contacts said a more likely possibility is that declining demand may take PC pricing down with it in the second half of the year. A good deal of first-half growth in PC has come from the automotive market, rather than from previous PC mainstays like information technology and business equipment, sources said.
That unbalanced growth leads to the possibility that first-quarter PC buyers were buying ahead of their own demand curves in an attempt to avoid paying still-higher prices in the second half of the year, when some expect demand to taper off.
Both the PET bottle resin and PC increases are reflected on this week's Plastics News resin pricing chart.