Monomer prices push up resin tabs.

Economic activity is on the rise, but plastics resin prices appear to be rising even faster. Resin producers say they are still being punished by rising energy and monomer costs, so they're pushing up polyolefin, vinyl, and styrenic prices as fast as they can. Engineering resins are going up, too.

Pressure on PE prices

Polyethylene prices moved up a solid 4 cents/lb in January. At press time, it was too early to predict the outcome of the 5 cents price hike announced for February.

Contributing factors: PE resin demand has been increasing, but suppliers have not improved their thin profit margins due to continued upward pressure from feedstock costs, particularly natural gas. The result is continued upward pressure on ethylene monomer. Contract prices went up 2 cents/lb in January to 31.5 cents/lb, while spot prices rose to 29 cents, up from 20 cents early in the fourth quarter of 2003. Some industry analysts think another 2 cents to 3 cents increase is possible when February contracts are settled.

PP going up, up, up

Polypropylene prices had risen a total of around 7 cents/lb by mid-February as a result of the December hike of 3 cents to 4 cents/lb and the January increase of 3 cents/lb. Suppliers were trying to push through another 3 cents/lb increase last month. On top of that Basell, Dow, BP, Arco, and Formosa all announced a 5 cents increase for March 1.

Contributing factors: Suppliers say these increases are necessary because of exceptionally high demand for PP and their need to restore operating margins to acceptable levels due to rapidly rising feedstock, energy, and other costs. PP plant utilization rates are in the mid-90% range, and propylene monomer supplies are tight because of planned and unplanned cracker turnarounds. Monomer producers have put customers on allocation. Monomer prices rose more than 20% between November and February and could rise at least an equal amount again by the end of March. January propylene contracts settled at 25.5 cents/lb and producers were looking to add another 4 cents to 5 cents in February. Fortunately, some easing of energy and feedstock costs is expected to come around April.

PVC prices rise

PVC prices rose 2 cents in January and appeared to be up another 2 cents in mid-February. Several major producers announced 2 cents hikes for March as well. Formosa hadn't announced by press time but was expected to support the March increase. If pipe grade goes up 2 cents in February as expected, and the March 2 cents increase sticks, that will put pipe grade at the 40 cents turning point where ductile iron traditionally becomes more competitive.

Contributing factors: Pipe demand is good, bat after numerous planned and unplanned outages, VCM is Light. A fire in Westlake's Calvert City, Ky., ethylene plant in mid-January caused Westlake to take planned maintenance at a VCM unit earlier than expected. Westlake's outages are expected to last about a month.

PS, EPS hikes for March

With hikes of 4 cents in January and 4 cents in February already announced, Nova, Dow, BASF, and ChevronPhillips are supporting a 3 cents/lb hike for March as well. In EPS the 6 cents increase announced for January 1 split into a 3 cents hike in January and another 3 cents in February. Nova and Styrochem announced a further 4 cents/lb for March, but Huntsman and BASF posted only 3 cents hikes, effectively capping the increase.

Contributing factors: A tremendous amount of global monomer capacity is temporarily out of service for plant turnarounds. Meanwhile, ethylene and benzene feedstock prices are moving up, and resin producers say resin demand is up since January to a level they characterize as good but not robust.

Engineering resins up

Last month, we reported that BASF aimed to raise neat nylon 6 prices by 9 cents/lb on Feb. 1. Although no other suppliers appeared to follow suit, BASF followed up with another increase of 6>/1b on compounding resins for March 1.

Meanwhile, Dow and BASF said their ABS and SAN prices would go up 4 cents/lb on March 1. BASF's hike also applied to ASA, ASA/PC alloy, and MABS (methacrylate/ABS).

Dow also hiked polycarbonate 4 cents/lb on March 1. Bayer said it would hike PC, ABS, PC/ABS, and SAN resins on March 1 but would not say by how much.