Prices inch toward recovery
By Staff -- Purchasing, 5/6/1999
Prices for polyvinyl chloride, (PVC) have begun a slow recovery after a recent 1¢/lb price increase has stuck, say buyers. Now producers are pushing the second half of a proposed 2¢/lb across-the-board increase.After being rebuffed by buyers for the better part of the last three quarters, producers finally got a partial increase in February. They tried again to pass the increase in March and failed, but buyers believe the market may be ready for another 1¢/lb increase to boost margins and stimulate growth.
Purchasing's forecast: PVC prices will stabilize or increase slightly by the end of the second quarter.
A buyer based on the West Coast believes prices will begin to slide once again as demand falls off following the third quarter, as the peak construction season comes to a close.
One Midwest buyer says that demand may not matter as much as the need for higher PVC prices to improve producer margins and stabilize the price slide.
Experts point to oversupply of PVC capacities during good times and Asian export reductions for the overall problem. It's also important to remember that PVC is largely affected by the construction industry, which is seasonal. Domestic demand for materials typically follows an April-to-October cycle.
PVC prices have fallen an average of about 7¢/lb in the past year. According to Purchasing's monthly chemical transaction survey, current prices for general purpose PVC are at 24¢/lb for contracts and 26¢/lb on the spot market. Contracts are down 7¢/lb from Q1 of 1998 and are forecast to increase only slightly to 25¢/lb by this time next year. Tags have followed a similar pattern, falling from 30¢/lb to the current 25¢/lb. Purchasing expects tag prices to drop to about 22¢/lb by Q3 1999, before rebounding to almost 25¢/lb by the end of first-quarter 2000.
Prices are at 52¢/lb for dispersion resin contracts and 50¢/lb for dispersion resin tags. PVC film prices have stabilized at 36¢/lb for contracts, but spot tags rose unexpectedly to 38¢/lb, according to the latest data from our monthly transaction price survey.
In supply news, Borden Chemicals and Plastics, LP, has transferred 200 million lb of capacity from its Illiopoplis, Ill., plant to its newer facilities in Addis, La., and Geismar, La.
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