PVC prices continued a slow rebound from their 18-month slump by rising a penny per pound in February, said buyers and producers contacted recently.
Major PVC makers still are trying to implement the second half of a 2 cent per-pound increase announced Jan. 1. Suppliers also have announced a 2 cent hike for March 1, which buyers may see in early April.
``Realistically, everybody along the line wants to get the price up,'' a Kansas PVC buyer said.
Pipe makers that benefited from earlier price reductions now need the increases to pass along higher pipe prices to their customers, several industry players said.
``Demand may not matter as much as it has in the past,'' a New York-based PVC buyer said. ``In part, the increase is because pipe prices are still terrible. This [increase] has to happen throughout the industry.''
A buyer in Ohio said PVC makers have been more steadfast in their approach to pricing so far in 1999. ``Now, there's a general desire for manufacturers to increase prices,'' he said. ``Last year, it was almost like they were waiting for each other to make a decision.''
Thin margins already have led Borden Chemicals and Plastics LP, North America's fourth-largest PVC maker, to transfer 200 million pounds of capacity from an older plant in Illiopolis, Ill., to more efficient facilities in Addis and Geismar, La. The company is considering expanding specialty resin production in Illiopolis later this year.
The Illiopolis PVC transfer is expected to eliminate 40 jobs and cause a short-term tightening in U.S. PVC supply.
``We see this as a more efficient utilization of our assets,'' Borden spokesman Pete Loscocco said.
Pat Duke, a DeWitt & Co.consultant in Houston, said strong domestic demand, resurgence in Asian exports and pressure from ethylene and chlorine price hikes have strengthened PVC price increases in recent months.
``Right now [PVC makers] are in a narrow window to raise prices that will run through June or July,'' Duke said.
Early-year price run-ups are common in the PVC market as construction-related businesses build their inventories in preparation for the summer season. But market overcapacity prevented these traditional price hikes from going through in 1997 and 1998.