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April 25, 2005 02:00 AM

Materials Briefs

Frank Esposito
Senior Staff Reporter
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    Plastics News staff reporter Frank Esposito wrote the following items from the CMAI World Petrochemicals Conference and the DeWitt World Petrochemical Review, both held March 30-31 in Houston.

    Global PVC market at three-year peak

    The global PVC market is in the midst of a three-year peak that's providing very high returns on investment for PVC makers, said Rick Smith, PVC analyst for Chemical Market Associates Inc. of Houston.

    Smith said the peak should run through 2006, even though tight supplies of feedstocks vinyl chloride monomer and ethyl dichloride could affect PVC production.

    In North America, PVC selling prices are close to the top of the market. North American producers and processors, however, will have to contend with the growth of imported PVC finished goods, such as floor coverings or wall and ceiling covers. Many of these goods are originating in China.

    ``A lot of the do-it-yourself flooring market already is coming from imports,'' Smith said.

    High energy prices also have taken away any cost advantage North American PVC makers once had.

    Between 2004 and 2009, Smith expects global PVC demand to grow at a rate of almost 4 percent annually.

    Excess PS capacity takes toll worldwide

    Excess capacity will continue to hurt the polystyrene market in the near future, keeping global operating rates around 80 percent.

    CMAI PS analyst Alex Lidback said PS operating rates should average between 78 percent and 82 percent in the 2004-09 period.

    ``There's 2 million tons of excess capacity globally, and the whole market's only 12 million tons,'' he said.

    North America won't be seeing any new PS capacity any time soon, but globally, more than three billion pounds will come on line by 2010, with most of that amount arriving in China.

    High prices for benzene feedstock will continue to hamper PS, Lidback said. PS production costs already are at record levels.

    ``It's difficult to get [PS] prices up 6 or 7 cents at a time to keep up with costs,'' Lidback explained.

    If prices get too high, the entire chain could be affected. Lower PS demand would slow down styrene monomer growth and then flow back into benzene, he added.

    PP prices are likely to peak this year

    Global polypropylene prices should peak this year, while global demand is expected to grow six percent annually through 2009.

    CMAI PP analyst Bob Dennett then expects prices to coast downward through 2009. Capacity additions will remain strong, with 5.5 billion pounds set to open this year around the globe, followed up by more than 6.6 billion pounds in 2006 and about 4.4 billion pounds in 2007.

    And although prices have been rising in the last 24 months, PP remains ``the resin of choice'' in the auto industry, Dennett said. More than one-third of all automotive plastic uses comes from PP parts such as door trims, quarter panels, bumper fascias and radiator fan shrouds.

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