Prices soft through year-end
By Staff -- Purchasing, 5/7/1998
Buyers of polyvinyl chloride (PVC) should have a field day with weakening prices through year-end. Many buyers already are, but there are some market factors that make the pricing picture more complex. Regional transportation costs and peak demand in spring and summer will likely sustain prices for some buyers through the third quarter. However, by fall, tags will drop another cent or two.The downturn in Asian demand accounts for the fall off in PVC prices. For instance, bulk contracts for general-purpose-grade resin are at 26(cent)-27(cent)/lb midway through the second quarter, says one Northwest buyer. Spot prices hover 1(cent)-2(cent) above contracts. This is a far cry from late-1997 expectations of contracts in the mid-30(cent)/lb range for these usually peak months.
And the price picture is just going to get sunnier for buyers. Tags should slip to 24(cent)-25(cent)/lb by late in the second quarter, according to the Northwest source. His forecast even takes into account transportation costs from suppliers, a number of whom are clustered in Texas and Louisiana. He suggests that buyers located on routes that feature more freight competition could see even lower tags.
The slowdown in demand is flooding the market with excess product. Supply continues to build as U.S. and European suppliers decrease exports to Asia. In addition, Asian PVC suppliers are selling product overseas and often undercut domestic prices.
And producers in the U.S. have yet another problem: Chunks of new capacity are coming on stream this year. High prices in 1995 and early 1996 drove expansion, and now the industry has to reconcile the available capacity with slowing orders. The Northwest buyer reports that certain U.S. PVC suppliers are partially shutting down facilities to balance inventory with demand.
The only significant factor keeping prices afloat is historically high PVC demand for construction in spring and summer. The Northwest buyer expects strong U.S. construction demand, which will buoy otherwise weaker tags.
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
Now Playing:
