Strong early-year buying has enabled North American makers of suspension PVC resin to raise prices an average of 2 cents per pound since Jan. 1.
``Things are a little stronger at this point than we might have expected,'' one PVC resin executive said. ``I think a lot of [resin production] lines in the industry are running hard right now.''
The increase is reflected on this week's Plastics News resin pricing chart.
Buyers chalked up the demand surge to a strong housing market, as well as to some pre-buying that has occurred in the face of more 2 cent-per-pound increases announced by suspension PVC makers for Feb. 1.
A Texas-based PVC buyer said he may buy ``an extra car or two'' of PVC to avoid higher prices in February. The buyer also said that if the February increase takes hold, it will put PVC prices close to a level where construction firms consider using pipes made of ductile iron instead.
Construction-related applications accounted for almost 65 percent of U.S./Canadian PVC use in the first 11 months of 2003, according to the American Plastics Council in Arlington, Va. PVC sales into rigid pipe and tubing - the largest single PVC end market - were up almost 1 percent vs. 2002 in that period, even though overall U.S./Canadian PVC demand dipped 2 percent.
Of PVC's major U.S./Canadian end uses, calendering took the biggest hit in 2003, dropping almost 8 percent through November. Siding-related PVC sales also were down almost 8 percent.
Recent Commerce Department data portrays a housing market that remains strong, in spite of periodic predictions of its demise. U.S. housing starts in December hit a record high, posting an adjusted annual rate of almost 2.1 million units. The real number of 1.85 million housing starts for 2003 also was the highest in 25 years.
And even though new single-family home sales fell 5 percent in November, the Commerce Department reported that the category remained on pace for a record 1.12 million sales in 2003. If that pace continues for December, it will break the record of 1.085 million sales set in 2002.
Several industry watchers reported that operating rates at PVC resin plants were above 90 percent, putting the market close to sold-out status.
The only capacity added in 2003 was a 250 million-pound streamlining completed by Formosa Plastics Corp. USA in Point Comfort, Texas.
Even if the U.S./Canadian PVC market posts only a modest 2 percent sales gain in 2004, that will create the need for about 275 million pounds of additional material.
Elsewhere, officials at Westlake Vinyls Corp. said its PVC production will be reduced for two to three weeks because of a Jan. 22 fire in the ethylene unit of the firm's plant in Calvert City, Ky. It is not known what caused the fire, which was not fully extinguished until Jan. 24 and which resulted in one employee suffering minor injuries.
Maintenance work on a unit producing PVC feedstock vinyl chloride monomer also will be done while the ethylene unit is being repaired. That maintenance originally was scheduled for later in the year.