HOUSTON (April 14, 10 a.m. EDT) — Compared with other commodity plastics, PVC's outlook is downright stable.
While other materials have been buffeted by gyrating feedstock prices, the North American PVC market steadily has pushed through price increases, buoyed by strength in the housing market. That strategy, combined with disciplined output from PVC makers, should yield growth of about 2.5 percent in 2003, said a pair of market analysts who spoke recently at industry events in Houston.
“The journey of the last couple of years has left many [PVC makers] feeling beaten,” Chemical Market Associates Inc. consultant Nicholas Vafiadis said at his firm's World Petrochemical Conference, held March 26-27 in Houston. “Your reward for surviving this arduous trip may be two to three years of relative tranquility and stability.”
North American PVC demand “hit the ground running” in early 2003, Vafiadis added. “The decline in demand that surfaced late in the third quarter of 2002 reversed itself by mid-December and has not slowed to date.”
For full-year 2003, Vafiadis expects a 2.5 percent jump in U.S./Canadian domestic demand, though a drop in export business will lower that rate to 2 percent.
The expectations of Jon Hanson, a consultant with Houston's DeWitt & Co., are in the same range. The short-term market could be affected by possible capacity restarts by Shintech Inc. in Addis, La., and Westlake PVC Corp. in Geismar, La., later this year. Both of those plants previously were operated by Borden Chemicals and Plastics LP.
Though no new North American PVC plants are on the books, Hanson estimates the region will need another 1.5 billion pounds of capacity to meet demand into 2007.
Globally, he anticipates a problem in Asia, which is lacking more than 2 billion pounds of chlorine feedstock needed to meet its PVC demand through 2007. Chlorine supplies in North America and Europe largely will be consumed internally, leaving little left for Asia, Hanson said at his firm's World Petrochemical Review, also held March 26-27 in Houston.
On the pricing front, PVC makers gained 4 cents per pound total in pricing in January and February and are having early success with a similar hike for March. Increases of 5 cents per pound have been nominated for April.