Look for stiff fight on hikes
Staff -- Purchasing, 7/15/2004 2:00:00 AM
Chemical prices continued to climb last month, but the pace of business slowed a bit, indicating that buying conditions are becoming a little saner. It seems likely that chemical prices will continue to rise due to high hydrocarbon tags. Producers posted higher contract prices last month for ethylene and propylene, which had been flat since the first of the year. Buyers indicated they will strongly buck proposed 1-4 cents/lb increases for ethylene and 2-4 cents per pound increases for propylene. Reason: They are having little luck getting much higher prices for products such as plastics made from the chemical monomers. Since margins remain thin, resistance will be strong. Experts project continuing high prices for natural gas, which is an important feedstock in the United States for ethylene. The U.S. Energy Information Administration predicts that natural gas spot tags will average about $6.20 per mcf this year, up about 13% from last year. "Even though inventories of natural gas appear normal, strong demand, coupled with high petroleum prices, has lifted the ceiling for natural gas prices considerably," reports the EIA. At the end of May, natural gas inventories in the United States were about 23% higher than the same time a year earlier. Buyers surveyed by Purchasing magazine forecast that prices will rise 2 cents a pound over the next six months for ABS, high-density polyethylene, polystyrene and polypropylene.
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