Prices for suspension PVC and solid polystyrene have continued their comebacks in 2002.
July saw another 2 cents take hold in suspension PVC, bringing the year's total price hike to 14 cents per pound. On pipe-grade material, that equals a remarkable climb of about 52 percent.
However, several PVC buyers contacted recently see relief on the horizon in the form of Houston-based Shintech Inc.'s decision to push a 2 cent-per-pound increase back to Sept. 1. Other PVC makers matched that move.
The price delay was greeted enthusiastically in the PVC pipe market, where prices recently have dropped as construction starts have slowed and inventory has built up.
``Pipe prices have dropped like a rock,'' a Midwestern PVC buyer said. ``If [PVC makers] get another price increase, it'll just be a muscle situation.''
``If [construction] sales don't pick up, [pipe extruders] won't buy material,'' a Texas-based PVC buyer said. ``People won't want to build inventory with the most expensive resin of the year.''
PVC supplies have remained snug, with industry operating rates in the low 90s in spite of demand growth that reached almost 6 percent in the United States and Canada in the first five months of 2002, according to the American Plastics Council in Arlington, Va.
The price increases and demand upturn have provided ``much-needed margin improvement'' for Oxy Vinyls LP of Dallas, according to Barry Hendrix, PVC sales vice president.
``We've exceeded our initial business plans,'' Hendrix said of the 2002 PVC market. ``After 2001, we didn't anticipate 2002 changing so radically.''
The PVC market could continue to be affected by a chlorine market that looks to be somewhat tight for the next couple of years, Hendrix said. A depressed caustic soda market has limited chlorine production this year, which in turn has reduced the amount of chlorine available to make PVC feedstock vinyl chloride monomer.
``A number of chlorine plants have been closed or idled because of poor economics,'' Hendrix said. ``There's been a net capacity reduction and no new investment.''
In its second-quarter financial report, PVC maker Georgia Gulf Corp. of Atlanta credited higher PVC prices and volumes with increasing the profit of its chlorovinyls unit 30 percent to $43 million, compared with the first half of last year.
PVC's 6 percent U.S./Canadian gain has included massive sales jumps of 20 percent into siding and 18 percent into extruded windows and doors, according to APC. Combined, those markets made up almost 20 percent of domestic PVC use through May.
The U.S. construction market has held up its end of the bargain. Even with housing starts down significantly from May to June, the market is on track for about 1.6 million starts, according to the National Association of Home Builders in Washington.
That number would surpass the 2000 and 2001 marks and equal the 1999 level.
PS picture cloudy
In PS, prices are up, but the picture is more clouded. Through June, PS makers had pushed through an average of 8 cents in per-pound increases out of the 10 cents they had been seeking, according to several buyers contacted recently.
Some buyers reported seeing a full 10, but the 8 cent total is reflected on this week's Plastics News resin pricing chart. PS makers continue to work on additional 4 cent increases that were scheduled to take effect July 1.
``We were buying more material earlier in the year and surging ahead of the curve, but now we're behind,'' a New England-based PS buyer said. ``We're getting to the point where we can't absorb more without getting price increases ourselves.''
Results from APC and market leaders Nova Chemicals Corp. of Pittsburgh and Dow Chemical Co. of Midland, Mich., also tell divergent stories.
U.S./Canadian sales were up 11 percent through May, according to APC. That jump included a gain of more than 13 percent in food packaging.
But Nova's styrenics business, which includes styrene monomer, continued to struggle in the first half of 2002.
Sales dropped 16 percent to $615 million as volumes remained flat from the first half of 2001. The unit lost $50 million in the first half of 2002 after losing $77 million in the first half of 2001.
Dow reported that its global PS sales were up 9 percent in the second quarter, compared with 2001, and that volume climbed 15 percent.
Selling prices, however, remained below where they were in the same quarter a year ago, according to the company's second-quarter report.