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Prices jump for polypropylene and suspension PVC

By: Frank Esposito

January 30, 2014

North American prices for PVC and polypropylene resin have started off 2014 with a bang, with prices of both materials climbing since Jan. 1.

Regional prices for suspension PVC are up an average of 3 cents per pound, while prices for PP are up an average of 5 cents, according to buyers and market sources contacted recently by Plastics News.

For PVC, the price move is the first to hit the market since prices fell an average of 1 cent per pound in October. Regional PVC prices increased a net of 5 cents per pound during 2013, according to the PN resin pricing chart.

Sources cited stronger demand — as pipe makers and other construction-related businesses stocked up on inventory in advance of construction season — as one reason for the January price hike. Led by a stronger economy, U.S. housing starts are expected to surpass the 1 million mark in 2014. If that happens, it would be the first time in five years that they did so. The U.S. housing market had collapsed in the wake of the recession.

North American PVC production also was affected by an outage after fire damaged an Axiall Corp. plant making vinyl chloride monomer — a PVC feedstock — in Lake Charles, La., on Dec. 22. Atlanta-based Axiall has declared force majeure for VCM.

In a Jan. 28 letter to customers, Axiall officials said that damaged equipment is being repaired, and that the firm hopes to resume production of VCM at the site in late March. If that step is successful, the firm would lift force majeure in April.

The Axiall VCM outage "gave the [January] price increase some strength," a PVC buyer in the southern U.S. said. Regional PVC makers already have announced similar 3-cent increase attempts for February and March.

The buyer added that the relatively low amount of price volatility experienced by the North American PVC market in 2013 "shows that producers have more discipline in what they make and, as a result, are keeping price up."

U.S./Canadian PVC sales were flat in 2013 at just under 15.3 billion pounds, according to the American Chemistry Council in Washington. A domestic sales gain of more than 4 percent was wiped out by a 7.5 percent drop in export sales. Export sales had been a strength for the regional PVC market in recent years, but the region saw more competition from other parts of the world in 2013, sources said.

Regional sales of PVC into film and sheet shot up 12 percent in 2013, according to ACC, while sales of the material into rigid pipe and tubing grew almost 7 percent. Rigid pipe and tubing was PVC's largest domestic end market once again in 2013, accounting for almost 45 percent of domestic sales.

For PP, the 5-cent January hike came on the heels of a 4-cent December upswing, leading market watchers to believe the material's rampant price volatility won't go away anytime soon.

Regional PP prices grew by a net of 9 cents per pound in 2013, according to the PN chart, but total price volatility — combining increases and decreases — was 49 cents, easily making PP the most volatile commodity resin in North America during the year.

"It's more of the same," market analyst Scott Newell said of the January hike. "December was a pretty good month for demand, with some pre-buying of big blocks of cars, and spot prices are pretty stable."

Newell — who is with Resin Technology Inc. in Fort Worth, Texas — added that regional PP makers in January were able to add 1 cent in margin to a 4-cent price hike for propylene monomer when implementing the increase.

Upward price momentum may be slowing down, however, as PP makers have nominated an increase of only 1 cent per pound for February.

North American PP sales fell almost 1 percent in 2013 to just under 16.4 billion pounds, according to ACC. Domestic sales grew almost 1 percent — but export sales tumbled 35 percent, as high prices made PP from the region uncompetitive in foreign markets.

Among domestic end markets, sales of PP into injection-molded housewares led the way in 2013, growing almost 10 percent, according to ACC. That segment accounted for 8 percent of domestic PP sales for the year.