In a sign of how far-reaching global supply issues have become in the plastics market, a resin supplier in Pennsylvania is banking on new solution PVC capacity in Brazil to help keep his U.S. customers happy.
Solution PVC is a specialty material with annual North American demand of only 100 million pounds, small in comparison with the 10 billion-pound-plus market for commodity PVC.
Solution PVC is used in adhesives, metal coatings for coils and cans and primers for wood applications.
The material sells for $1.80-$3 per pound, and prices have jumped 10-20 percent this year as raw material prices have climbed. Annual growth for the product is estimated at only 1-2 percent. However, supplies are very tight this year, although there's some disagreement as to why.
Ted Blandy, principal of Pennsbury Polymers, a plastics sales and marketing firm in Newtown, Pa., said the tightness is the result of Dow Chemical Co. selling more of its solution PVC output in foreign markets. Midland, Mich.-based Dow is the only remaining solution PVC maker in North America.
In an e-mail interview, Dow performance resins global business director Mark Siebert said the situation has been caused by operating problems at its plant in Texas City, Texas, and not by export sales, which Siebert said actually have decreased in 2004. Tight supplies have led Dow to limit customer orders since June. Siebert expects the situation to continue through the first quarter of 2005.
Regardless of the cause of the shortage, Blandy is counting on 6 million pounds of new solution PVC capacity that should be available for resin supplier Worldwide Partnerships in Sao Paulo, Brazil.
The material is being toll-produced for Worldwide by resin maker Braskem SA.
``There's increased demand [for solution PVC] in China, and that's affecting North America,'' Blandy said in a recent telephone interview. ``It's not a big, growing market, but [processors] are having a hard time getting material.''
The market was tightened even further earlier this year when PVC giant Shin-Etsu Inc. of Tokyo exited the field, Blandy added. Several North American resin makers, including Occidental Chemical Co., have stopped making solution PVC in the past decade as well.
Siebert said Dow will invest ``several million'' dollars in solution PVC to improve product quality and increase production rates.
Pennsfield imports solution PVC into the North American market. His firm also distributes some solution PVC through Plasco LLC, a Mendham, N.J.-based plastic supplier run by PVC industry veteran Jerry Marcum.
Dow entered the solution PVC market when it acquired Union Carbide in 1999. The firm's only solution PVC production site is in Texas City.
Siebert added that Dow expects solution PVC growth rates to remain ``slightly behind'' gross domestic product for the next several years.
Although flexible packaging use is on the rise, uses as coatings in magnetic media and rigid containers are declining.