Although PVC makers and buyers reported another 1 cent price drop in September, many involved in the market are expecting prices to stabilize as fall moves into winter.
Producers pointed to an upturn in Asian export demand as a reason the market may level out, while buyers said the traditional market patterns — which generally hibernate through winter as the construction market slows — could take over and slow the penny-a-month price slide they've seen so far this year.
And for many on both sides of the PVC fence, it's coming down to the simple matter of how low prices can go before producers' margins are down to zero. Through September, prices had dropped an average of 8 cents per pound this year, mainly because of industry overcapacity and decreased exports to Asia.
PVC makers can take some solace in knowing that buyers' expectations of further price drops appear to be on the wane.
``October, November and December could be stable,'' a Texas-based buyer said. ``It's usually a slowdown period at the end of the year.''
An Illinois-based buyer said he also expects the rate of price decreases to slow, but he and other buyers contacted said they were surprised to receive long-term pricing offers of one to two years from various producers.
``That's sending the wrong message,'' the Illinois buyer said. ``To me, that says [PVC makers] think this is a long-term problem. It makes it look like they're running scared to keep their market share.''
No PVC producers contacted could confirm that such long-term offers were being made to buyers.
Several buyers also reported seeing a September price drop of only one-half cent, although most reported the full 1 cent reduction.
``I think buyers view the market as having bottomed out,'' said a spokesman for PVC maker Occidental Chemical Corp. of Dallas. ``They don't have the fear of buying material and having it not be worth what they paid for it by the time the shipment arrives.''
Reduced activity in end-of-month spot markets is another sign the market could be stabilizing, said Dick Mason, controller for PVC maker Shintech Inc. of Houston.
``We're not being asked to meet that many [spot deal prices],'' Mason said, adding that ``panic spot sales'' that took place earlier in the year nearly have vanished from the market.
Mason also said that much of the price reduction the market has absorbed in the second half of the year seems to be based more on buyer psychology than on physical supply and demand.
``It concerns me when you start to see major chunks of business conducted at spot prices,'' he said. ``But we're not seeing that now. This is really more of a 30 cent market than a 20 cent market.''
A 2 cent price increase an-nounced by most major PVC makers for Oct. 1 is set to be implemented Nov. 1, but many buyers said there was little chance prices could increase in the current market.