PVC prices dropped another penny per pound in December, as demand fell off and processors worked off existing inventories.
Since mid-2000, PVC prices have been reduced by an average of 5 cents per pound. At the same time, raw material costs have remained high, and Shintech Inc. has added 500 million pounds of capacity by opening its PVC plant in Addis, La.
But some industry sources suggest the new Shintech plant is not affecting North American PVC supply yet, since much of the new output is being shipped to South America and Europe. Houston-based Shintech plans to add another 500 million pounds of capacity in Addis this spring.
Georgia Gulf Corp. of Atlanta, which ranks third in North American PVC capacity, blamed a disappointing fourth quarter on lower PVC resin sales tied to a slowdown in the construction industry.
"The lack of demand has resulted in selling prices for the fourth quarter declining at a much faster rate than the prices of raw materials, resulting in lower margins on lower sales volumes," Georgia Gulf officials said in a news release.
Although U.S./Canadian domestic PVC sales were relatively flat through September, the overall market was down almost 3 percent because of a plunge of more than 50 percent in export sales, according to the American Plastics Council in Arlington, Va.
PVC sales into rigid pipe and tubing — which accounted for 43 percent of total sales — were up 2 percent in that period, but sales into siding — which accounted for 15 percent of sales — were down more than 3 percent.
Inventory at a number of pipe producers is reported to be up, a condition that probably is tied to November's 2 percent drop in new U.S. home sales that the U.S. Department of Commerce recently reported. New home sales also fell in October.
Plastics News also is correcting prices for pipe-, injection- and general-purpose-grade PVC on the weekly resin pricing chart. That portion of the move does not reflect recent market activity but instead indicates a correction of price increases reported in 1999.
Plastics News had reported increases of 17 cents per pound in 1999, but subsequent interviews with industry sources indicate that only 11-12 cents of that amount held long-term. The remainder was given back in price rebates or through other discounts.
As a result, PVC prices on this week's pricing chart are 6 cents per pound lower than last week's prices, reflecting the 1 cent drop in December and the 5 cent correction from 1999.