Strong demand lifts resin prices.

Resin suppliers are optimistic that the time is ripe for them to repair battered profit margins with further price increases in all major volume thermoplastics. Domestic sales of these resins grew 5.1% last year, according to the latest SPI figures; markets remain strong, and suppliers continue to improve their capacity utilization.

PS HIKES INDUSTRYWIDE

Virtually all major PS resin suppliers have issued price hikes of 3|cents~/lb on general-purpose and HIPS grades, effective April 1. The move appears to have been initiated by Huntsman and Chevron.

They attribute this price initiative to a strong supply/demand balance as well as to upwards pressure from precursors benzene and styrene. Styrene monomer producers were aiming to implement price hikes of 2|cents~/lb in March. Meanwhile, PS resin demand in January and February was stronger than in 1993, suppliers say.

At press time, it was unclear whether prices of ignition-resistant PS resins would also move up. Two of the three key players in this business--Huntsman and BASF--included these resins in their price-increase announcements. Dow did not, although the issue was "under study," according to a key source there.

NEW PP HIKE GAINS SUPPORT

With an effective date of March 1, PP suppliers were aiming to implement the price increases first announced for February 1, although full implementation was not expected until April 1 due to contract protection arrangements. Unlike the limited attempt to raise prices 2|cents~/lb on February 1, this new 3|cents~/lb initiative is backed by all key players including Himont, Amoco, Shell, Huntsman, Fina, Aristech, Exxon, Phillips, Quantum, and Rexene. Suppliers attribute the move to their need for improved profit margins and to continued strong demand. (Domestic PP sales last year were up 8.8%). Utilization rates are reported to be in the high 80% to low 90% range.

PE HIKES UNDER WAY

In January, several major players called for 5|cents~/lb across the board for LL/LDPE and HDPE on March 1. Phillips 66 didn't join in until mid-February, when it issued an increase of 3|cents~/lb on its HDPE and its new LLDPE resins, effective March 1. Following this action, some other suppliers of HDPE, including Solvay, Paxon, Fina and Occidental, scaled back their increases to 3|cents~/lb.

At press time, it appeared that other PE suppliers would trim back their HDPE increases to 3|cents~/lb while maintaining 5|cents~ for LL/LDPE. One major player reports that this two-tiered pricing hike was actually being implemented as of March 1 for non-contract customers. For customers with price protection, implementation was not likely to take place until April 1.

Suppliers maintain that despite continuing overcapacity, especially in HDPE, they need to improve profit margins, and strong market demand ought to support their effort. Industry utilization rates are in the mid-80% range--an indication of the strengthening in the market when compared with the high-70% to low-80% range that prevailed last year.

In related news, Himont issued a 3|cents~/lb price hike on its UHMW-PE products for battery separators, effective March 1.

PVC HIKE DUE IN APRIL

A new price initiative in PVC resins appears to have been led by Georgia Gulf, which called for a 2|cents~/lb increase across the board, effective March 1. This move was gaining momentum among other major suppliers at press time last month. Full implementation was not expected until April 1 due to typical 30-day contract protection.

In PVC compounds, suppliers indicate that by the end of February they had fully implemented price hikes issued between December and January. These included a 5|cents~/lb hike on rigid bottle compounds, 3|cents~/lb on pipe-fitting compounds, and 5|cents~/lb on custom injection molding compounds (i.e., for business-machine housings and telecommunications).