The North American PVC market is off to a robust start in 2012, with strong demand and higher feedstock costs pushing resin prices up a total of 4 cents per pound since Feb. 1.
The regional market saw a 2-cent hike in February and another 2-cent hike in March, according to buyers contacted by Plastics News. Those increases came after a successful 3-cent hike in January.
The combined 7-cent move in the first three months of the year works out to a price increase of about 8 percent on suspension-grade PVC used in pipe applications, according to the Plastics News resin pricing chart.
Higher feedstock costs have played a role in the increases, with ethylene feedstock tracking expensive crude oil instead of lower-priced natural gas. This split has occurred even as natural gas is increasingly used as a feedstock in the region.
A big increase in U.S./Canadian PVC sales in the first two months of the year may be even more surprising. Regional PVC sales jumped almost 13 percent in that period, according to the American Chemistry Council in Washington, with domestic sales up almost 23 percent, even as export sales declined 3 percent.
That division also runs counter to what the North American PVC field has seen in recent years, when a strong export market kept PVC's head above water as the domestic market struggled with a steep drop-off in construction work. Included in the recent domestic sales increase is an eye-opening 48 percent jump in PVC sales into rigid pipe and tubing.
U.S. housing starts rose almost 4 percent to 609,000 in 2011, according to the National Association of Homebuilders in Washington — marking the second straight annual increase, after the market bottomed out in 2009 at 554,000. National housing starts were at almost 1.4 million as recently as 2007, before the recession hit.
Housing starts for March came in at an annual pace of 654,000 — which would be an increase of more than 7 percent vs. 2011. That's a big deal for PVC, since construction-related uses accounted for about 60 percent of domestic sales in the first two months of the year.
A Texas-based PVC buyer said the material's fast start in 2012 might be tied to warmer-than-usual temperatures in some parts of the country, which allowed contractors to begin building projects sooner than they would have otherwise.
“The weather might have pushed the normal spring [resin] buy up into January and February,” he said.
Regional PVC makers saw April prices come in flat and now are working on a 2-cent increase attempt for May. “I think now [PVC makers] are looking at margin building,” the Texas buyer said.
PVC's early-year increases in the region come after prices rose a net of 8 percent in 2011. But that total included a 4 percent price drop in the second half of last year.
Price increases for copolymer acetal and polybutylene terephthalate resins also are being reported on this week's Plastics News resin pricing chart. The increases incorporate price changes that hit those materials during 2011. Prices for homopolymer acetal also are being corrected to reflect price changes in both 2010 and 2011.
A 5 percent hike in prices for copolymer acetal equates to a price increase of 6 cents per pound on the PN chart. Acetal demand overall has rebounded as the regional auto sector has improved, since automotive uses account for about 40 percent of North American acetal demand. The correction in prices for homopolymer acetal is 30 cents per pound.
The North American acetal market remains balanced, with demand from the auto, industrial and consumer segments improving in early 2012, according to a recent report from IHS Chemical in Houston.
In PBT, a 12 percent increase has added 15 cents to pricing levels on the PN chart.
Increasing demand from the auto sector also has been driving PBT growth. PBT maker Sabic Innovative Plastics is working to implement a 9-cent price increase that first hit the market in February.