Commodity prices definitely firming.

Higher prices for the four major volume thermoplastics--PE, PP, PS, and PVC--now appear inescapable, as the latest increases are gaining industrywide support. Aided by a more favorable supply/demand balance, suppliers finally appear determined to recoup profit margins that were lost during the long slide in the first half of this year.

PVC BIDS GOODBYE TO TVAs

A move to increase prices of PVC resins through the removal of a 1 [cent]/lb TVA, effective Sept. 1, was initiated by Occidental Chemical Co. All major players except Formosa Plastics quickly followed suit. This latest price initiative follows similar industrywide moves made in early summer (see PT, Aug. '91, p. 105), which involved price increases totaling 2 [cents]/lb, nominally effective July 1 and Aug. 1, though actual implementation of these increases was somewhat delayed. One major supplier says the first increase was unsuccessful, but the second did stick, and the third is also expected to go through.

Suppliers in late August placed selling prices of g-p homopolymer at 27-31 [cents]/lb for large-volume contract buyers, and spot prices for large buyers at 31-32 [cents]/lb. They also conceded that some competitive discounting continues to take place. Says one source, "There are so many deals being made that it's hard to give an average price at this point."

Large-volume buyers contacted by PLASPEC placed g-p homopolymer prices closer to 27-30 [cents]/lb, with some maintaining that they had gotten material for as low as 25-26 [cents]/lb.

SUPPORT FOR RP, PS HIKES

The price initiatives for both PP and PS resins started by mid-third quarter (see PT, Sept. '91, p. 99), gained strong support in the past month. For PP, the move was initiated by Himont in early August and supported soon after by Amoco and Eastman. By mid-month other key players had followed suit, including Huntsman, Solvay Polymers, Exxon, Aristech, and Quantum. A week later, Shell and Fina also confirmed similar actions. All called for increases of 4 [cents]/lb across the board, effective Sept. 3, except for Quantum and Fina, which posted a Sept. 15 date. At press time, it could not be confirmed whether Phillips 66, Lyondell Petrochemicals, Genesis Polymers, and Rexene had taken any official action.

Meanwhile, the PS price increase initiated by Dow Plastics in August was gathering steam. Dow called for a 3 [cents]/lb increase on g-p crystal and HIPS, and 4 [cents]/lb on ignition-resistant grades, effective Sept. 15. Within a couple of weeks, this move gained strong support from most other major suppliers, but with some discrepancies in effective dates: Mobil Chemical, Sept. 16; Fina, Sept. 20; Novacor, Sept. 23; Huntsman and Chevron, Oct. 1. Amoco had yet to confirm any action.

HMW-HDPE HIKES EMERGE

Following the failure of Dow's move to raise HDPE prices by 4 [cents]/lb Aug. 1, owing to lack of industry support, a new initiative to boost prices of HMW-HDPE film resins was under way at press time, with two key players sending out official notification to customers and others rumored to be planning similar action.

Hoechst Celanese issued a 4 [cents]/lb increase on all of its HMW-HDPE grades, effective Oct. 1. Occidental Chemical issued a 2 [cents]/lb increase for Oct. 1. While not confirmed at press time, it was reported that Dow and Exxon were likely to support the move. In fact, Dow never officially rescinded its earlier 4 [cents]/lb increase on all of its HDPE resins, but instead issued a TVA until September.

If the current move to raise HMW-HDPE resin tabs gains in support, it will help PE suppliers to implement price increases that were issued in early July for LDPE and LLDPE resins. Supported industrywide, the 4 [cents]/lb across-the-board increases were to have become effective Aug. 1. As reported last month, however, most large buyers enjoyed price protection into September. So except for spotty successes at a few small- and medium-sized customers, implementation of the increases was stalled.

In late August, suppliers were cautiously optimistic that at least part of the increase (1-3 [cents]) would finally get through. Says one source, "It is possible that for LLDPE clarity grades and LDPE resins in general, we'll get the full 4 [cents]/lb as supply/demand is somewhat tighter" than for most LLDPE.