AKRON, OHIO — Short-term supply tightening and a booming construction market allowed PVC makers to raise prices a total of 1 cent per pound in November and December.
The success of that move — and tightening in the North American market for spot material — is giving producers hope that a current 2 cent-per-pound increase also will be successful.
``We've been running really hard,'' a spokesman for PVC maker Occidental Chemical Corp. of Dallas said. ``And it helped that export values were on par with domestic values in November and December.''
Profitability remains poor, however. Borden Chemicals & Plastics LP, the fourth-largest North American producer, is considering selling its assets, while No. 6 producer Condea Vista Corp. recently swapped its 450 million-pound Oklahoma City PVC plant to Minneapolis pipe firm Eagle Pacific Industries Inc. for a share in the company.
But the biggest consolidation has been at the top, where OxyChem and Geon Co. of Avon Lake, Ohio, are merging their PVC, vinyl chloride monomer and chlorine businesses to create Oxy Vinyls LP.
Several buyers contacted recently said PVC supplies have tightened since late last year. New construction fueled the situation, as housing starts in December 1998 were 12 percent higher than they were in the same month in 1997, according to the Census Bureau.
The bureau's figures also show 1998's total of 1.62 million single-family and apartment unit starts was the highest total since 1987.
That was good demand news for pipe and siding makers, who gobble up more than half of all PVC production. But despite the market growth, resin overcapacity and decreased Asian demand kept prices down throughout 1998, when prices dropped an average of 8 cents per pound.
``Volume is unbelievable, but pipe makers have to work harder to make any money,'' a New Jersey PVC buyer said. ``Pipe makers need the [2 cent] increase to pass it on to their customers.''
Although some pipe makers at the low end of the pricing spectrum reported 2 cent increases in the November-December period, most PVC buyers reported a 1 cent jump.
A decline in spot market also has added some discipline to the market, industry sources said.
A Missouri-based PVC buyer said processors still have the advantage, but ongoing industry mergers like the Oxy/Geon deal are making pricing negotiations more competitive.
PVC supply has been further tightened by maintenance turnarounds, which have limited supplies of VCM, PVC's primary feedstock, according to a PVC executive who wished to remain unidentified.