By: Frank Esposito
September 27, 2012
AKRON, OHIO (Sept. 27, 12 p.m. ET) — Two months of flat pricing for North American PVC came to an end in September as prices rose an average of 3 cents per pound.
Regional PVC makers “wanted to raise prices in August, but they waited too long,” a Texas-based PVC buyer said. “Ethylene spot has gone up quite a bit [in September] and the export market has come back to life.”
An official with a PVC-making firm agreed that the export market “is coming back,” and added that his firm is sold out of its current resin output.
U.S./Canadian PVC sales were up about 4 percent in the first half of 2012, according to the American Chemistry Council in Washington. Domestic sales increased slightly less than 4 percent, with export sales up just over 4 percent in that period.
The increase in domestic sales is encouraging to many in the industry, since that market has been hammered in recent years as the U.S. construction market retracted after the global economic recession. Even in the current market, construction uses accounted for about 60 percent of domestic PVC sales in the first half.
An increase of almost 6 percent in sales of PVC into rigid pipe and tubing was especially welcome. That category is the industry’s largest sales sector, with products used in infrastructure in residential and commercial construction.
“The domestic market has taken off,” the Texas-based buyer said. “Most pipe producers are busy right now and [resin] inventories are low.”
Other areas showing solid sales growth in the domestic PVC market were extruded windows and doors (up 16 percent) and siding-related applications (up more than 6 percent).
If North American PVC sales continue at their current pace in the second half, the market would have sales of about 15 billion pounds, surpassing its pre-recession 2007 sales total of 14.6 billion pounds. But the makeup of the market has changed dramatically since then, as lower U.S. ethylene feedstock prices and PVC demand from growing markets around the world have allowed North American PVC markets to boom, while domestic demand receded.
Exports accounted for 34 percent of first-half 2012 PVC sales after accounting for almost 39 percent of that total in full-year 2011. By comparison, exports generated only 10 percent of regional PVC sales in 2007.
The 3-cent September price hike comes after prices remained flat in July and August. PVC makers now are seeking price hikes of five cents per pound effective Oct. 1. Market watchers said that at least part of that increase might be able to stick.
Major PVC plants in the Louisiana area were shut down in advance of Hurricane Isaac in late August, but most of those plants soon were restarted. Industry contacts said those temporary shutdowns weren’t expected to have much impact on PVC supply.
Prior to the two-month flat period, regional PVC prices had dipped a total of 7 cents per pound in May and June, according to the Plastics News resin pricing chart. The 3-cent September increase means that regional PVC prices now have returned to the price levels they were at when the year began.