North American producers of polyethylene and polypropylene are trying to secure 4 cent-per-pound price increases set for Dec. 1.
Both increases initially were announced by Dow Chemical Co. of Midland, Mich., and quickly were supported by most producers. The only exception is in PP, where industry contacts said British Petroleum plc announced an increase of only 3 cents per pound for PP on the same date.
The hikes are intended to guard against ``energy price spikes or demand spikes down the line'' as North America heads into winter, according to Pat Duke, a market analyst with the DeWitt & Co. consulting firm in Houston.
Duke added that North American PE supplies currently are somewhat tight, due in part to Dow's idling of almost 900 million pounds of capacity and shutdowns or maintenance turnarounds at ethylene monomer sites enacted by several producers. In PP, supplies of resin and propylene monomer feedstock are adequate right now, but both areas could see tightening in the second or third quarter of 2004, Duke said.
Driven forward by historically high prices for natural gas feedstocks, PE prices are up an average of 15 percent this year, while PP prices have climbed almost 25 percent, according to Plastics News' resin pricing chart. Natural gas was selling for $4.40 per million British thermal units on Nov. 5, a 13 percent jump from its year-ago price and roughly double the level it hit in the late 1990s.
These resin price increases - including rare late-year increases won in September - have come even as core demand for the resins has dropped. Through July, U.S./Canadian high, low and linear low density PE sales were down 5-7 percent, while U.S./Canadian PP sales had slipped 2 percent, according to the American Plastics Council in Arlington, Va.
This week's Plastics News resin pricing chart also confirms erosion in prices for acrylics and commodity-grade and engineering-grade ABS that has occurred since mid-2002. Decreased demand - a U.S./Canadian drop of 11 percent through July, according to APC - has pushed average per-pound selling prices for ABS down 10 percent in that period. That equates to an average drop of 7 cents per pound for commodity-grade ABS and of 10 cents per pound in engineering-grade ABS.
In acrylic, lower demand and market overcapacity have resulted in a similar 10 percent drop. The drop equals an average downward move of 9 cents per pound.