By: Frank Esposito
October 31, 2013
AKRON, OHIO — North American prices for polypropylene and suspension PVC resins each dropped in October as seasonal demand declined.
Regional PP prices slid an average of 2 cents per pound, while PVC prices declined by an average of 1 cent. The PP decrease comes after prices were flat in September. It's the first pricing move for that material since prices rose an average of 5 cents per pound in August.
Combined with earlier price moves, the October decrease means that regional PP prices now are down a net of 5 cents per pound so far in 2013.
PP's broad range of uses in commercial and industrial products was lifted earlier in the year as U.S. GDP growth improved from 1.8 percent in the first quarter of 2013 to 2.5 percent in the second quarter. The U.S. unemployment rate also has declined as 2013 has rolled on, dropping from a high of 7.9 percent in February to a low of 7.2 percent in September.
For PVC, the 1-cent drop is the first move seen in the market since prices posted a 2-cent drop in May. The four-month period of flat pricing is rare for the North American PVC market. It's only the second time since 2003 that PVC prices remained unchanged for three months or more, according to the Plastics News resin pricing chart. The previous such flat stretch occurred in the second half of 2011.
Even with the October drop, regional PVC prices remain up a net of 5 cents per pound so far in 2013, according to the PN chart.
North American PVC sales in 2013 have been helped by the continued comeback of the U.S. housing market, since construction-related uses account for about 60 percent of domestic PVC use. U.S. housing starts in August came in at an annual rate of 891,000, according to the National Association of Homebuilders in Washington. That rate is up about 1 percent vs. July and almost 19 percent vs. August 2012.
So far in 2013, U.S. housing starts are on pace to finish around 900,000. That would be an improvement of about 15 percent vs. 2012 and the country's highest building total since 2008.