Makers of PVC and PET have won price-increase battles since Jan. 1.
Suspension PVC prices are up an average of 5 cents per pound in North America since Jan. 1, according to buyers contacted recently by Plastics News. Average selling prices for PET bottle resin are up 3 cents in the same comparison.
The 5-cent PVC move — coupled with a similar attempt for Feb. 1 — has PVC buyers on edge since, historically, prices for that material usually move up no more than 3 cents at a time. But feedstock pressures from ethylene, along with markets tightened by maintenance turnarounds and increased export levels, are changing the rules of the PVC game in early 2010.
“We're going to have to take a different look at these,” a Texas-based PVC buyer said. “Volume is down, but the PVC makers are telling us they still have fixed costs. Some of them had no profit at all in December.”
The U.S./Canadian PVC market also is reeling from a drop in sales that stood at 6 percent in the first 10 months of 2009, according to the American Chemistry Council in Arlington, Va. Backing out exports — which were up 24 percent — leaves the domestic market with a 12 percent sales loss.
The region's two largest end markets — rigid pipe/tubing and siding — were down 10 percent and 13 percent, respectively, during that period. A major drop-off in the U.S. building and construction market has shifted the ground under the feet of most PVC makers.
The size of the January increase and of the February attempt are creating “significant marketing challenges” for downstream PVC users, according to Robert Rosenau, president of Performance Products and Solutions at PolyOne Corp., which ranks as North America's largest PVC compounder.
“Once you get downstream of the resin producers, the challenge [of raising prices] just gets bigger,” Rosenau said by phone Feb. 4. “And market conditions aren't as ripe as you'd like them to be for that magnitude of an increase.”
Rosenau added that PVC buyers such as Avon Lake, Ohio-based PolyOne also are under pressure from higher prices for plasticizers and other additives used to make PVC compounds.
“The increases for resin and for additives have been relatively uniform,” he said.
On average, North American PVC prices increased by 17 percent during 2009, after bottoming out when oil prices and consumer demand crashed in later 2008.
In PET, North American prices have jumped up 3 cents after making a 5-cent leap in December. Feedstocks again were the culprit, as demand for the material remained seasonally weak.
“Demand remains off and there's plenty of supply,” said Mike Dewsbury, a market analyst with the Resin Technology Inc. consulting firm in Fort Worth, Texas. “On the feedstock side, ethylene glycol is still pushing the hardest, but paraxylene has backed off some.”
For full-year 2009, regional PET prices rose an average of 11 cents per pound — or 18 percent — after bottoming out in late 2008. PET makers now are seeking increases of 5 cents per pound for Feb. 1.
PET demand has been affected by low growth in its dominant carbonated soft drinks end market, and by lightweighting technology, which has reduced the amount of PET needed per bottle, especially in the bottled water sector.
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