Resin hikes reflect higher feedstocks
Staff -- Purchasing, 4/3/2003 2:00:00 AM
Higher feedstock costs and fuel prices continue to combine with supply issues to spur price hikes in markets for plastic resins. Unprecedented surcharges—driven by spikes in prices for natural gas and related feedstocks—have been added to previously announced list price increases, pushing up prices for high, low and linear low density polyethylene (PE) resins by an average 24% and boosting prices for polystyrene (PS) by 12.5%, according to numerous buyers.
That's why PURCHASING's weighted index of plastic resins prices rocketed to 147.5 in March from 129.4 in February. The chemicals pricing index was impacted less by energy costs, rising just to 138.0 (from 135.4).
PE and PS suppliers note that there hasn't been a major price increase in more than two years because of aggressive cost-containment programs. However, the companies now are facing increasing costs for research and development, facilities, services and raw materials. PS inventories remain very low in the supply chain, forcing buyers to accept price increases. The main deterrent remains lingering price protection clauses, which are now expiring. That's probably why the percentage of buyers expecting a polystyrene price increase jumped from 19% in PURCHASING's January report to 40% in February and 54% in the March poll.
BASF Corp.'s Styrenics business has taken 12% of its total polystyrene production capacity off line in North America. But the key to the market has been energy costs as much as reduced supply, according to PURCHASING's proprietary price report. Producers have used both reasons to raise spot prices by 8¢/lb so far this year (just slightly less than the dime/lb increase they proposed for the first quarter).
Plastic resins prices continue up
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