The North American PVC market would be happy if 2017 matched 2016. Elsewhere, as the year draws to a close, the regional PET market is doing OK, while the polystyrene market hopes that better days are ahead.
Through October, PVC was doing better than any other major North American commodity resin. U.S./Canadian PVC sales were up more than 5 percent, according to the American Chemistry Council in Washington.
PVC has seen domestic sales growth of almost 5 percent augmented by a surge of almost 7 percent in exports. Sales into its flagship rigid pipe and tubing sector were up almost 7 percent.
“We're cautiously optimistic about next year,” an executive at a PVC maker said. “There could be some volatility, but in general the market should be up.
“The pipe market has been strong all year,” the executive added. “Siding also has been strong, but it's been a little weaker here at the end.”
The executive also said that pipe and infrastructure could benefit from increased government spending in both the U.S. and Canada in 2017.
The North American PVC market is seeing growth based on housing, especially from single-unit housing that uses more PVC, according to Mark Kallman, a market analyst with Resin Technology Inc. in Fort Worth, Texas.
“For next year, a lot of rhetoric about the [U.S. presidential] election points to infrastructure work and stronger GDP growth,” he said. “There are some good signs there and lots of ethylene [feedstock] coming on, so it could be a good all-around situation.”
Kallman cited home remodelers' use of PVC siding, deck and fencing as a growth area for 2017. Continued low feedstock costs in the region should allow PVC makers like Shintech Inc. to continue to export the material from the U.S. to other parts of the world, he added.
Both Kallman and the PVC executive added that PVC maker Westlake Chemical's recent acquisition of rival Axiall Corp. will continue to affect the regional market in 2017. “You've got cases where Westlake and Axiall were competing, and now their people have to call each other and ask for a quote on material,” the executive said.
Phil Karig, managing director of the Mathelin Bay LLC consulting firm in St. Louis, said that PVC saw “robust demand growth in 2016” as the U.S. housing market remained relatively strong, combined with exports of low cost PVC.
“Absent a total collapse in world oil prices, PVC exports should continue at a healthy clip in 2017,” he added in an email. PVC demand from the housing market will depend on whether higher mortgage interest rates are offset by increases in consumer and business demand related to government spending on infrastructure.
“Beyond exports, as long as the housing market continues to grow, housing related PVC uses in general and PVC pipe in particular will continue to be strong in 2017,” he said.
Karig added that PVC makers are bringing on new capacity “at a more measured rate” than the polyethylene market, and they're not facing “the constant threat of lower cost imports” as is the case in the polypropylene market. As a result, he said, PVC profit margins “are currently more defensible and sustainable” than they are in most of the other major commodity resin markets.