Mexico City — Specialty chemicals maker Orbia Advance Corp. SAB de CV has paused all new PVC manufacturing projects because of a weak global market for the material.
Mexico City-headquartered Orbia, formerly known as Mexichem, said plans for a major PVC production project on the U.S. Gulf Coast would be delayed "until prices stabilize above $1,000 per metric ton."
CEO Sameer Bharadwaj added in a Feb. 22 earnings call: "After we complete the current phase of engineering, we will pause PVC capacity expansion investments until we see the markets supporting strong investment economics."
Officials said China is exporting large amounts of PVC resin because of its slumping economy.
"Given the weak real estate and construction markets in China, more than 2 million tonnes of PVC are being exported annually," Bharadwaj said.
The situation could last another two or three years, he said.
In a statement emailed to Plastics News on Feb. 26, Orbia said: "Considering our recent PVC market evaluations, we have decided to temporarily pause our PVC capacity expansion until we see strong investment economics.
"This decision is aligned with our CEO's recent statement during the last earnings call as to Orbia's prudent growth project investment approach for navigating anticipated weakness continuing through 2024. Orbia is once and always focused on the long-term success and sustainability of our PVC operations.
"We are completing the engineering phase of this project before we pause activities, and presently working with our project employees and contractors to reconfigure their roles, explore other opportunities and ensure a seamless transition."
Orbia first announced plans for the Gulf Coast investment in 2022. At the time, officials said the site would produce 1 million tonnes per year of suspension grade PVC. The site would be integrated into ethylene and chlor-alkali-vinyl chloride monomer.
They said at the time that the unspecified Gulf Coast location would enjoy a cost advantage over Asian producers, whose PVC is acetylene based.
Bharadwaj told analysts in 2022, "the U.S. Gulf Coast is especially advantaged from the point of view of the lowest cost raw materials, whether it is energy, natural gas, ethylene and brine." He said the project would be a four-year phased-in investment, beginning at the end of 2024 and and wrapping up in 2028.