A drum-tight supply situation lifted suspension PVC prices again in June, while strong demand and a cutback in supply did the same for expanded polystyrene in the first half of 2002.
With another 4 cent-per-pound increase taking hold in June, suspension PVC prices now are up a total of 12 cents per pound for the year. In pipe-grade material, that translates into a remarkable surge of about 40 percent.
``It's a pure supply/demand situation,'' a Midwestern PVC buyer said. ``Feedstock availability is a big factor, but there's also capacity that's being kept off-line. It's a shrewd business decision by [PVC makers].''
``[PVC] producers are scrambling to supply orders,'' a second Midwestern PVC buyer said. ``A lot of buyers are being held to contract levels.''
Demand has been solid - up more than 5 percent in the United States and Canada through April, according to the American Plastics Council in Arlington, Va. But moves like Shintech Inc.'s shuttering capacity acquired from Borden Chemicals and Plastics LP in Addis, La., also have affected the market. Reduced availability of chlorine to make PVC feedstock vinyl chloride monomer is playing a role as well.
But the biggest thing affecting the North American PVC market may be the presence of a mere four major suppliers: Shintech, Oxy Vinyls LP, Georgia Gulf Corp. and Formosa Plastics Corp. USA.
``The makeup of the industry has changed,'' one industry source said. ``With only four [major producers] left, it's easier for them to manage supply and push through price increases.''
In EPS, a surge of demand that had totaled almost 17 percent through April, combined with BASF Corp. closing 50 million pounds of supply in South Brunswick, N.J., enabled producers to enact the 6 cent upward move. Another 6 cent hike is on the table from Nova Chemicals Corp., Huntsman Corp. and BASF.
EPS prices had dropped more than 10 percent between mid-2000 and late 2001, according to the Plastics News resin pricing chart. The current move represents an uptick of about 8 percent.
Sales of EPS into block applications were up more than 26 percent through April, according to APC. In that period, EPS accounted for more than 15 percent of all U.S./Canadian PS sales.
The EPS market remains focused on internal use by producers such as Dart Container Corp., with as little as 40 percent of total output being sold commercially, according to an industry estimate.