Demand is far from great, but average North American selling prices for suspension PVC and PET bottle resin have increased since May 1 anyway.
Buyers contacted by Plastics News cited higher feedstock costs and, in the case of PVC, increased export sales as reasons for the somewhat unexpected increases. The biggest feedstock impact has been in per-barrel prices for crude oil, which have rebounded almost 55 percent in the last three months, to almost $73 in late trading June 11.
Suspension PVC prices are up an average of 2 cents per pound since May 1. Some buyers reported a slightly lower amount, but anticipated that the total May-June increase would be 3 cents per pound. PVC makers originally had nominated hikes of 3 cents per pound on both May 1 and June 1, but buyers said at least one producer lessened the amount in the face of buyer resistance.
North American PVC demand remains soft, even in the midst of the traditional construction season, which almost always drives PVC growth. The collapse of the U.S. housing market has had a similar impact on PVC, which generates about 60 percent of its North American sales from pipe, siding and other construction-related uses.
For April, U.S. housing starts commenced at an annual rate of 458,000 down 13 percent from March and down 54 percent from April 2008. Since peaking at 2.1 million in 2005, U.S. housing starts have been in free fall, finishing at 906,000 last year.
The export market has given the PVC industry a slight lift because of advantageous North American ethylene prices, said Steve Brien, a market analyst with Chemical Market Associates Inc. in Houston. Brien added that the North American PVC market could benefit later this year or in early 2010 from federal stimulus spending on infrastructure projects using PVC pipe.
Industry sources estimated current North American PVC operating rates at around 75 percent. Regional PVC sales also are down more than 10 percent in the first part of 2009, sources said.
In PET bottle resin, prices are up an average of 3 cents per pound since May 1, according to several buyers. Regional PET makers had been seeking increases of 6 cents per pound. Seasonal early-summer beverage demand and higher feedstock prices allowed part of the increase to take hold.
But year-on-year demand remains down about 3-4 percent, partly because of light-weighting practices adopted by major bottle makers, according to market analyst Mike Dewsbury.
The number of bottles made could be up this year, but the weight of the resin used to make the bottles could be down, said Dewsbury, who's with Resin Technology Inc. in Fort Worth, Texas.
Dewsbury estimated that current North American PET operating rates were around 85 percent, which he described as better than expected, given current market conditions.