AKRON, OHIO — PVC makers are divided on an attempt to halt a yearlong pricing slide by raising prices 2 cents per pound effective Sept. 1.
The attempt was led by Georgia Gulf Corp. of Atlanta and quickly was followed by Borden Chemicals & Plastics LP of Columbus, Ohio, and Formosa Plastics Corp. USA of Livingston, N.J. But market leader Occidental Chemical Co. of Dallas said it wouldn't support the increase because of ``undisciplined activity'' in the market.
``We're not ruling out doing something later in the year, but based on what we've seen in August, we don't think September is the right time,'' an OxyChem spokesman said.
OxyChem's plan to merge its PVC resin business with that of Geon Co. of Avon Lake, Ohio, will make it North America's largest PVC maker.
Officials at Shintech Inc. of Houston said they will continue to push for an increase that the company had sought in May, but they will not issue a separate September increase. Officials at Condea Vista Corp. of Houston said they were considering September price increases but they had made no decisions at press time. Westlake Corp. officials could not be reached for comment.
The efforts come as PVC processors, consultants and producers confirmed that PVC prices dropped another cent per pound in July. Prices have dropped an average of 6 cents a pound to date in 1998, primarily because of overcapacity and the collapse of the Asian export market.
Georgia Gulf said a September price increase is ``unprecedented,'' while Borden described it as ``unexpected,'' since it goes against the traditional buying patterns of the PVC-heavy construction market.
``If PVC resin prices remain at their current levels, growth of capacity will be curtailed, which will result in future volatile price swings,'' Rick Combi, Georgia Gulf national sales manager, wrote in his firm's announcement. ``That will penalize both suppliers and consumers by slowing demand for PVC resin and its end products we have up until now enjoyed.''
Combi added in a recent telephone interview that the increase attempt may be the first led by Georgia Gulf, which ranks sixth in North American PVC capacity.
``We felt we needed to do something like this because the market was just getting crazy,'' Combi said. ``Hopefully, this will spur something to happen.''
Condea Vista PVC business manager Charlie Matson agreed an increase is needed, but he added that an aggressive spot market has undermined prior increase attempts this year.
``The key is that the price will not go up as long as people are selling spot resin at lower prices,'' Matson said. ``It's ridiculous for companies that are competing in the spot market to put a price increase out. They can do the same thing just by backing out of the spot market.
``If they won't back out, how can they say they're going to increase the price 2 cents a pound, but they're willing to go down half a cent or a cent to gain business?''
But the market has reached the point where some PVC producers may have no choice but to dive into the spot market, according to a major Missouri-based PVC buyer.
``The spot market is purely a function of supply and demand,'' the buyer said. ``A number of companies have had to be aggressive to take care of their material.''
A buyer at a Texas-based PVC pipe maker said competition in the pipe market also is playing a role in the continued PVC pricing slide.
``The price of pipe keeps dropping because of an undisciplined market,'' the buyer said. ``The best that PVC producers can expect is that the pipe guys have so much business in September and October that they can hold the same price.''
Some PVC makers are finding hope in the possibility that the traditional summer construction season will extend further into fall as contractors hustle to complete projects delayed by wet spring weather. More potential good news comes from the Census Bureau, which reports housing starts were up 9 percent through July.
To date, healthy domestic sales have not been able to stop the pricing slide. North American PVC sales and captive use had climbed more than 4 percent through June, according to the Society of the Plastics Industry Inc. in Washington.