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October 17, 2005 02:00 AM

Lost production sends up N. American PP prices

Frank Esposito
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    Feedstock-related shortages have led North American polypropylene makers to hike prices an average of 10 cents per pound since Oct. 1.

    As the plastics and chemicals industry works to recover from the recent hurricanes, operating rates are improving, but uncertainty and several days of lost production still are keeping prices high.

    Increases of 5-6 cents per pound for PP already had been announced for Oct. 1, but the hurricanes' impact led producers to increase that amount to 10-12 cents per pound. The increase went through at 10 cents to a majority of buyers contacted by Plastics News, although some reported seeing the 12 cent amount.

    Major PP makers now are working on another increase of 7 cents per pound set for Nov. 1.

    ``Polypropylene isn't as tight as some other materials right now,'' said Pat Duke, a market analyst with the DeWitt & Co. consulting firm in Houston. ``But the market should still be generally tight through the end of the year.''

    As of Oct. 10, the only Gulf Coast PP plant that remained out of commission was Basell Polyolefins' 1.2 billion-pound-capacity site in Lake Charles, La., according to a report from Chemical Market Associates Inc., a consulting firm in Houston. That plant represents about 6 percent of total North American market capacity. About 18 percent of North American capacity for propylene feedstock also remained down, the CMAI report said.

    Industry sources said that PP makers Sunoco Inc. and Total Petrochemicals USA had returned customers to 100 percent of allocated orders. Other producers were meeting orders at levels as low as 50 percent.

    Also, other commodity resin production slowly was returning to normal, said CMAI. About 9 percent of North American high density polyethylene production remained down, with about 20 percent of low density PE out and 8 percent of linear LDPE down. In PET, about 7 percent of capacity was out, isolated to Wellman Inc.'s plant in Bay St. Louis, Miss.

    The situation remained a bit more extreme for feedstock needed to produce a variety of plastics. CMAI estimated that on Oct. 10 about 22 percent of ethylene was down, as was 29 percent of butadiene, 22 percent of benzene, 9 percent of styrene, 17 percent of paraxylene and 11 percent of vinyl chloride monomer.

    The most drastic situation remained in nylon feedstock cyclohexane, where CMAI estimated almost 59 percent of North American capacity was nonoperational.

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