The rapid-fire price increases of the last several months finally hit a wall of market resistance last month. The respite may be temporary, however, until processors work off swollen resin inventories built up at the end of 1999.
While suppliers have slowed, rather than halted, efforts to raise prices of polyolefins and PS, they are having more success lifting tabs on PET, PVC, ABS, and polycarbonate.
Polyethylene prices dropped 1-2¢/lb across the board in December. Meanwhile, a 4¢/lb PE hike is still supposed to have gone into effect Jan. 1. It is not expected to have much effect before the first of this month, owing to 30-day contract-protection agreements.
Contributing factors: The 1-2¢/lb price drop before year's end was largely attributed to processors working off inventories. The anticipated prebuying fueled by Y2K concerns did not materialize. PE suppliers are still aiming to push through the first price hike of this year. It's billed as either a new 4¢/lb increase or a downward adjustment of the last 5¢/lb hike of 1999, which was never implemented.
At press time, a 1¢/lb increase was being sought for January ethylene contracts. However, some industry sources doubt the move will succeed, as feedstock prices have been dropping due to the generally mild winter so far.
The first PP price hike of the year (3¢/lb on Jan. 1), was not widely implemented last month. No supplier has rescinded the hike, so this month will tell more as to its fate.
Contributing factors: The hike is meeting a lot of resistance. Suppliers say they are responding to upward movement in propylene monomer prices. Polymer tabs stood only 10-11¢ above monomer in December, and suppliers would like to see margins closer to the historical average of 16¢.
Processors are reportedly paying 3¢/lb more for bottle-grade resin as a result of an industry-wide increase that took effect Jan. 1.
Contributing factors: The first PET price hike of the year comes unusually early. Such increases typically emerge in the first quarter for implementation in the second quarter when seasonal demand begins to peak. Despite projected demand growth of 18-20% this year, PET suppliers say their margins are still below reinvestment levels. They also project tighter supplies in the second quarter.
Price increases are on the way for ABS, polycarbonate, and ABS/PC blends. Dow will raise prices of ABS for pipe, fittings, and automotive uses by 5¢/lb on Jan. 17 and all other ABS grades by 7¢/lb on Feb. 10. GE Plastics posted a 7¢ increase on all its ABS resins for Jan. 17. Bayer will hike automotive grades 7¢ and other grades 8¢ on Feb. 1. BASF could not be reached for comment.
As for polycarbonate, GE, Bayer, and Dow announced 11¢/lb hikes for Jan. 17, Feb. 1, and Feb. 10, respectively. All three firms will also boost ABS/PC blends by 8¢/lb.
Shintech surprised the market in mid-January by announcing a 2¢/lb PVC increase for Feb. 1. That brings Shintech in line with other producers' 2¢ hikes that were dated Jan. 1 but would take effect Feb. 1 after 30-day price protection runs out.
Contributing factors: Several PVC processors say Shintech has dropped 30-day price protection from its year-2000 contracts and has offered to index prices according to a published benchmark. PVC prices are expected to go up this month, as processors seek to build inventories ahead of the spring construction season. Another reason for prebuying is that some resin-plant maintenance shutdowns are scheduled for March.
Polystyrene prices in mid-January were level with those of a month earlier. Previously announced hikes for Jan. 1 and 15 have turned into a 3¢ hike for Feb. 1, which will take full effect in March.
Contributing factors: January resin demand was seasonally slow, which was exacerbated by the fact that processors were still working off resin inventories they had built up in December ahead of price increases. Meanwhile, a 2¢ styrene monomer price increase was on the table for January, and producers have announced a further 4¢ hike for Feb. 1.