Borden Chemicals and Plastics LP is restarting commodity-grade PVC production at its Illiopolis, Ill., plant, to meet surging market demand. The move also is being done "to meet market shortages for PVC," Borden Chief Operating Officer Wayne Leonard said in a news release.
Borden, the fifth-largest PVC maker in the United States, stopped commodity-grade production at Illiopolis after the first quarter of last year, preferring to run that type of material more efficiently at its plants in Addis and Geismar, La.
The 25-year-old Illiopolis plant then was to focus on specialty PVC grades, including dispersion and blending grades and copolymers. At the time, Borden officials said the move was "a more efficient utilization" of the Columbus, Ohio, firm's assets.
Borden restarted the Illiopolis plant in mid-February and has hired 20 employees. Forty workers were let go when the plant stopped making commodity resins.
PVC makers have benefited from 16 cents in price increases since January 1999, a result of robust domestic demand and a lack of new capacity additions.
At Borden, that boom translated into a 36 percent jump in the firm's PVC sales in the third quarter of 1999. Borden's overall PVC sales basically were flat through the first nine months of 1999, even with the Illiopolis capacity removed. In that period, PVC accounted for almost three-quarters of Borden's total sales.
Industry insiders had speculated that Borden would make the move because of the tight supply situation, which virtually has eliminated the spot market and caused PVC makers to limit most customers to contract purchases.
No significant new capacity will hit the North American PVC market until Shintech Inc. of Houston opens a 1 billion-pound-a-year plant in Plaquemine, La., next year.
Contacts also said Westlake PVC Corp. of Houston could reopen its PVC plant in Pace, Fla., to help meet the shortage. But others said the age and condition of the Pace plant would make it difficult for Westlake to profit from such a move.
Westlake officials could not be reached for comment. The firm, ranked sixth in U.S. PVC production, closed the 400 million-pound Pace plant in September 1998, when PVC prices and margins were in a nose dive.
PVC makers received another piece of good news Feb. 16 when the Commerce Department reported that January housing starts rose slightly instead of declining as many market analysts had predicted. The unexpected climb may be attributed to home buyers trying to move before interest rates rise further.
Construction-related applications, including pipe, siding, windows and doors, account for more than half of North American PVC sales.