BASF, Dow raise plastic resin prices in Europe

By Ahmed ElAmin

- Last updated on GMT

Related tags Polyethylene

BASF today joined Dow in raising the prices in Europe for plastic
packaging, a bid by both companies to pass on high raw material and
energy costs.

Both companies cited strong demand for resins along with high raw material and energy costs as behind their decisions to increase prices.

From 1 February BASF will increase its prices for its Ultramid brand of base polymers, for polyamide 6 and polyamide 66 extrusion and spinning grades and for the feedstock products caprolactam and adipic acid in Europe.

Caprolactam prices will be increased by €120 per tonne. Prices for adipic acid will rise by €100 per tonne. Polyamide prices will go up by €120 per metric tonne.

The extrusion and spinning grades in BASF's polyamide portfolio with the trade name Ultramid are used for the production of cosmetic packaging and for fibres.

Caprolactam and adipic acid are feedstock materials for the production of polyamides.

"This measure has been rendered necessary by the strong demand combined with the sharp increase in energy and raw material prices and the unsatisfactory margins,"​ BASF said today.

BASF and Dow's policies are to not publicly reveal the base prices of their polymers for competitive reasons.

From 17 January earlier this month Dow Europe increased prices by €30 per tonne for all grades of its low-density polyethylene (LDPE) resins and high-density polyethylene (HDPE) resins, Dowlex polyethylene resins, Attane ultra low density polyethylene (ULDPE) copolymers, Elite enhanced polyethylene resins and Aspun fiber grade resins.

Effective 1 February, Dow Europe will add an additional €120 per tonne for all grades of the same resins.

The company will also increase prices by €100 per tonne for all its general purpose polystyrene resins, high impact polystyrene resins and Styron A-Tech polystyrene resins.

"Energy costs rose significantly in the second half of 2005, while we saw prices for our polyethylene and polystyrene resins decline at the end of the year,"​ Dow explained on 19 January. " This has placed significant and unsustainable pressure on our margins."

In an earnings press conference on 23 January Dow executives said the company had increased polyethylene prices by 18 per cent on average last year, which allowed for some expansion in its margins.

The rate of increase varied considerably by region. Prices were up around 40 per cent in North America, but roughly flat in Europe and Asia Pacific. Volume in North America was restricted by the limited supply of ethylene.

For the year, prices rose 17 per cent, with substantial increases in all operating segments and all geographic areas. Volume declined by two percent from last year's strong levels, as customers reduced the inventories they had built in late 2004, and the disruption caused by the hurricanes temporarily reduced demand in the US, the executive stated.

The company's plastics segment had a nine per cent increase in sales to $3.1 billion in 2005. Prices were raised by 10 per cent compared with the same period last year, while volume was marginally lower.

Polyethylene volume was down from a very strong fourth quarter in 2004, principally the result of constrained ethylene supply on the US Gulf Coast caused by the hurricanes. Polyethylene volume in all other regions continued to be solid, with particular strength in Asia Pacific.

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