North American prices for polypropylene, PVC and nylon have climbed higher in recent weeks, as raw material prices have stayed high and demand has remained relatively steady.
PP makers succeeded in getting 2 cents out of a 3 cent-per-pound increase nominated for Feb. 1. That move comes on the heels of getting 3 out of 5 cents in January.
Demand had slowed somewhat compared with January and late 2004, according to market sources, but a run-up in pricing of propylene monomer feedstock helped part of the increase take hold.
``There was a little bit of stock build in the chain in January and February and producers overbuilt a little bit,'' said Pat Duke, a market analyst with DeWitt & Co. in Houston.
``Chinese buyers also were out of the market because of the Chinese New Year.''
But a number of market watchers are doubtful that the PP field can match the almost 7 percent growth it posted in the United States and Canada in 2004. That total included a domestic growth rate of almost 6 percent, according to the American Plastics Council in Arlington, Va.
Observers point out that easy chances to augment growth through replacing polystyrene or high density polyethylene may be diminishing.
Strong 2004 demand allowed PP makers to raise prices about 26 cents per pound - an increase of almost 50 percent on some grades. As a result, some buyers are crying for relief.
``These [PP] prices aren't going to be tolerable,'' a Chicago-based PP buyer said. ``We're looking for prices to peak in the first quarter and be flat to slightly down after that.''
In PVC, prices have risen an average of 3 cents per pound since Dec. 1. A 2 cent move took hold in December, while half of a 2 cent attempt went through in January. Producers still are attempting to get the remaining January cent in February, and a 2 cent hike is on the table for March 1.
A Texas-based PVC buyer said his firm was expecting housing starts to decline in 2005 as a result of market saturation.
A buyer based in New York state was more optimistic, saying his company expects a lot of construction activity this year. The buyer noted that high metal prices continue to give PVC an advantage in the pipe market.
But DeWitt's Duke cautioned that PVC makers might not have a big window in which to raise prices in 2005.
Government spending on construction projects is expected to be lower, and new or pending incremental capacity additions from Westlake Chemical Corp. and Shintech Inc. will provide adequate supply, he said.
PVC makers ``might have a little bit of trouble raising prices past March,'' Duke said. ``Demand will have to continue to be very robust.''
U.S./Canadian domestic PVC sales were up almost 7 percent in the first 11 months of 2004, according to APC.
North American PVC prices were up an average of 14 cents per pound in 2004, an increase of more than 30 percent.
In the nylon zone, prices edged up another 5 cents per pound in the fourth quarter of 2004, according to industry contacts.
The increase, however, might be the industry's last for a while, since a slowing North American automotive market kept U.S. and Canadian market demand almost flat in 2004.
Through November, total market growth for nylon was not quite 1 percent, with the domestic market checking in at just over that figure, according to APC. Sales into the automotive market - representing about 40 percent of nylon resin consumption - were up a mere 0.5 percent.
Sales to resellers, compounders and distributors provided a rare bright spot, with sales up almost 29 percent.
The 5 cent move leaves nylon 6 and 6/6 prices up an average of 14 percent in 2004, according to the Plastics News resin pricing chart. Nylon makers had linked the higher prices to high prices for benzene feedstocks.