With prices still dropping, PVC maker Westlake PVC of Houston has stopped operations at its 400 million-pound-per-year resin plant in Pace, Fla.
``This is a year that no PVC producer has been happy,'' Westlake spokesman David Hansen said in a Sept. 22 telephone interview. ``We're taking this step to optimize our manufacturing resources and meet our customers' needs.''
The Pace plant's production now will be handled at Westlake's Calvert City, Ky., PVC plant. Ten of Pace's 50 full-time positions will be transferred there as well.
Hansen said Westlake is reviewing a number of options for the site and has not set a date for reaching a final decision. Westlake acquired the plant in the early 1990s from PW Resin, which had owned it for a short time after buying it from Air Products and Chemicals Inc. Westlake PVC is a unit of Westlake Group.
``It's a cyclical industry and this is something we need to deal with,'' Hansen added.
Westlake and other major PVC makers also have pushed 2 cent price increases planned for Sept. 1 back to Oct. 1, coinciding with a similar move announced by Occidental Chemical Corp., the Dallas-based market leader. Condea Vista Co. of Houston and Borden Chemicals & Plastics LP of Columbus, Ohio, also confirmed similar moves.
PVC buyers and producers confirmed that suspension-grade resin prices dropped another cent per pound in August. This change is reflected on this week's Plastics News resin pricing chart. On average, PVC prices have dropped 7 cents per pound in 1998 — a decrease of almost 21 percent.
A North Carolina-based PVC pipe maker said pipe demand has continued to be strong throughout the year, but continued pricing drops and savvy buyers have combined to hurt his business as well.
``Our margins are as depressed as the resin makers','' he said. ``Buyers are very knowledgeable. They know when we get a price decrease and they expect the same thing.''
The closing of Westlake's Pace plant could tighten up supply available to the slumping Asian export market, but might not have an immediate impact on PVC prices, according to Pat Duke, a market analyst with Houston's DeWitt & Co. consulting firm. Westlake's effective annual capacity will drop from 1.2 billion pounds to 800 million pounds, ranking it seventh among North American PVC producers.
The market still is feeling the effects of a pair of factors — the lack of a spring pre-buying period among pipe makers and the volatility of the spot market, according to Charlie Matson, PVC sales manager at No. 5 producer Condea Vista.
As a result, Matson said, some pipe makers did not have inventory to cover their August sales. That situation could indicate price stability for the fourth quarter.
Matson also pointed out that spot market sales at significantly lower prices have added to the market's instability. Although only about 10 million pounds of resin are sold on the spot market each month, it sets the standard for the billion-pound-a-month North American PVC market, he said.
In other words, sales of 1 percent of market volume affect prices for the other 99 percent.
Through June, North American PVC sales and captive use were up 4.1 percent, according to the Society of the Plastics Industry Inc. in Washington. That increase included jumps of 16.9 percent in vinyl siding and 12.5 percent in extruded windows and doors.
However, the pipe market — which accounts for about 40 percent of overall sales — was down 1.3 percent in that same period.