HOUSTON - Sales of PVC are not going anywhere until the economy takes an upward turn and new construction sales take off, according to an analyst at the Dewitt Petrochemical Review in Houston. ``Although there is not a one-to-one correlation between new construction and PVC sales, there is a very close relationship,'' said Dennis Rohlfing, vice president for Dewitt & Co. Inc. of Houston.
``Each year the United States has had an increase or decrease in new construction, we see a corresponding increase or decrease in PVC sales into the building and construction market. As this industry moves, it will have a similar effect on the PVC industry,'' Rohlfing said.
``Over 60 percent of the PVC applications are in the building and construction market in the United States,'' he said.
``The second- and third-largest markets for PVC in the United States are the consumer and industrial market and the packaging market, with 6-7 percent each. This is a difference between the United States and Europe, where the usage for packaging applications is somewhat higher, but the [European] building and construction market also is large,'' Rohlfing explained.
``This shows the importance that the building and construction market is to the PVC industry. As a result, we need to be observant of this particular market's impact on the market and what we can expect in the future,'' he added.
For the future, Rohlfing does not expect PVC to return to the pricing level it reached in the second quarter of last year.
``Demand will be stimulated if prices do not dramatically increase, or if they stay at or near the present levels. This does not preclude price increases in certain regions, but it does say that a return to price levels of the July 1994 to September 1995 time frame will not stimulate demand,'' Rohlfing said.
Even with prices remaining at their current levels, Rohlfing said he believes demand for PVC will remain sluggish through 1996 in the United States, Japan and Europe.
Peter G. Clarkson, group planning manager for European Vinyls Corp., said 1996 may be a slow year for PVC growth. Clarkson spoke March 21 at the 1996 World Petrochemical Conference sponsored by CMAI in Houston.
Rather than basing his comments on the importance of the building and construction sectors, Clarkson said he relates growth in demand for PVC to the growth of industrial production.
``From the demand side, we may well be approaching the nadir of Western European industrial competitiveness, a reversal of which would help the demand for PVC, and the relative cost base,'' Clarkson said.
He said he sees the North American PVC industry as being at its zenith in ascendancy over other regions of the world and, while he believes North American producers will keep their strong position for many years, he sees the European PVC industry gaining strength and challenging North American producers as economic growth increases in Eastern Europe and the Confed-eration of Independent States.