Short-term tightness in raw material supplies has sent North American prices for PVC and ABS up in the last 60 days.
Average market prices for suspension PVC are up 5 cents per pound since Feb. 1, while regional ABS prices have jumped 10 cents per pound since March 1, according to buyers contacted recently by Plastics News.
The PVC jump is tied to tight supplies of ethylene feedstock, which has seen limited availability because of a number of planned and unplanned maintenance turnarounds at facilities throughout the region. North American PVC makers also are continuing to look for export opportunities outside the region to boost their own operating rates and to keep prices firm.
A number of market watchers are expecting domestic PVC demand in the U.S. and Canada to increase in 2010 after five consecutive years of declines. The declines have resulted from a slowing construction market, which accounts for more than 60 percent of regional PVC demand.
The 5-cent February move followed a similar move in January, and has made the going tough for North American PVC buyers, who often have their hands full passing along even smaller increases.
The rigid pipe and tubing market the single-largest end market for U.S./Canadian PVC use took another big hit in 2009, slipping almost 6 percent. U.S. housing starts peaked at almost 2.1 million in 2004, but finished 2009 at less than 600,000. Housing-start activity in the first two months of 2010 was up slightly, but remained under 600,000 for the two-month average, the Department of Commerce said.
In total, U.S./Canadian PVC demand has tumbled about 30 percent since 2004, according to the American Chemistry Council in Arlington, Va. Regional demand for 2009 checked in at just under 10.2 billion pounds.
Export growth decreased the size of the overall sales loss seen by U.S./Canadian PVC makers to about 20 percent in that period. U.S./Canadian PVC sales totaled about 12.8 billion pounds in 2009.
In ABS, tightness in butadiene and other feedstocks have sent two of the region's three major suppliers BASF Corp. and Ineos ABS into force majeure. Styrene prices also have been on a steady incline.
Although some price increases are warranted by feedstock pressure, market watchers said the magnitude of the increases 18 cents per pound in the first three months of 2010 has been a direct result of the extreme conditions at BASF's plant in Altamíra, Mexico, and at the Ineos plant in Addyston, Ohio.
North American ABS demand has been in steady decline and was estimated to be less than 1 billion pounds in 2009. But market watchers are more optimistic for 2010, with some predicting regional demand growth of 6 percent, partly as a result of increased auto production.
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