03 November 2003 00:00  [Source: ICB Americas]

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POLYVINYL CHLORIDE    November 3, 2003



CertainTeed, Lake Charles, La.


Colorite Polymers, Burlington, N.J.


Dow Chemical, Texas City, Tex.


Formosa Plastics, Baton Rouge, La.


Formosa Plastics, Delaware City, Del.


Formosa Plastics, Illiopolis, Ill.


Formosa Plastics, Point Comfort, Tex.


Geismar Vinyls Company, Geismar, La.


Georgia Gulf, Aberdeen, Miss.


Georgia Gulf, Oklahoma City, Okla.


Georgia Gulf, Plaquemine, La.


Occidental Chemical, Pottstown, Pa.


OxyVinyls, Deer Park, Tex.


OxyVinyls, Louisville, Ky.


OxyVinyls, Pasadena, Tex.


OxyVinyls, Pedricktown, N.J.


PolyOne, Henry, Ill.


PolyOne, Pedricktown, N.J.


Shintech, Addis, La.


Shintech, Freeport, Tex.


Shintech, Plaquemine, La.


Westlake PVC, Calvert City, Ky.


US Total




OxyVinyls, Fort Saskatchewan, Alberta


OxyVinyls, Niagara Falls, Ontario


Royal Group Technologies, Sarnia, Ontario


Canada Total


North America Total


*Millions of pounds per year polyvinyl chloride (PVC). Polyvinyl chloride is manufactured from vinyl chloride monomer (VCM) by any of four different processes: emulsion, mass, solution or suspension polymerization. The different processes yield resins having different physical properties. More than 90 percent of the PVC produced in North America is by the suspension route. Earlier this year, Formosa Plastics increased capacity at Baton Rouge, La., to 990 million pounds, up from 935 million pounds, through debottlenecking. Then Kaneka Delaware Corp. closed its 65 million pound-per-year PVC plant in Delaware City, Del. In late 2002, Keysor-Century Corp. ceased operations at its 60 million pound-per-year plant in Santa Clarita, Calif. In 2001, Borden Chemicals and Plastics idled production at its plants in Addis, La., and Geismar, La., removing 600 million and 575 million pounds of capacity from the marketplace, respectively. Then in 2002, Borden sold the Addis plant to Shintech and the Geismar plant to Geismar Vinyls Corp. The Addis plant was restarted earlier this year by Shintech, but the Geismar facility remains down. Also in 2002, Borden sold its 325 million pound-per-year plant in Illiopolis, Ill., to Formosa Plastics. Geismar Vinyls Corp. is an affiliate of Westlake Group (Houston). Profile last published 3/5/01; this revision 11/3/03.

2001: 13.225 billion pounds; 2002: 14.02 billion pounds; 2006: 15.66 billion pounds, projected. Demand equals pro-duction plus imports, which were 167 million pounds in 2001 and 224 million pounds in 2002, less exports, which were 1.196 billion pounds in 2001 and 1.091 billion pounds in 2002.

Historical (1997-2002): High, 41 cents per pound, PVC resin, pipe grade, bulk, US Gulf; low, 17.5 cents, same basis. Current: 37 cents, same basis.

Historical (1997-2002): 1.9 percent per year; Future: 2.8 percent per year through 2006.

Two types of PVC homopolymer are produced: rigid resins, which are inflexible and hard; and flexible resins, which contain a large proportion of plasticizers to make them soft and can be stretched. Products made from rigid PVC (75 percent of total demand) are chiefly extruded (94 percent) or molded (6 percent) items: pipe and conduit, fittings, automobile parts, blow molded products and roofing tiles. Flexible PVC (25 percent of total demand) finds outlets in calendered sheet, wire and cable coating, flooring, coated fabrics, shower curtains, automobile upholstery and furniture.

Construction, 74 percent (pipe and tubing, 46 percent; siding, 14 percent; windows and doors, 6 percent; other construction, including flooring and pipe fittings, 8 percent); consumer goods, 9 percent; packaging films and containers, 6 percent; electrical fittings and wire and cable coatings, 5 percent; transportation, 2 percent; home furnishings, 2 percent; miscellaneous, 2 percent.

Polyvinyl chloride is the second largest (after polyethylene) and most versatile of all thermoplastics. The construction industry accounts for over 70 percent of its demand. Hence, demand correlates closely with economic growth or decline. After two years of decline in 2000 and 2001, the US PVC market revived in 2002; demand in 2002 was up 6 percent over the previous year. This activity has carried forward to the present time. Operating rates are now about 88 percent of capacity. Stricter water management regulations, expanded street construction and sewer rehabilitation will drive higher demand for pipe in the US through 2006 with PVC attracting the best opportunities. Continuing development of new resin grades and novel compounding are driving the substitution of PVC in various applications for traditional materials such as metal, wood, concrete and glass.

The market for PVC remains under pressure from high energy and feedstock costs. If natural gas remains in a range of $4 to $5 per mmbtu, $1 to $2 above the traditional level, domestic producers will have an international disadvantage and could be forced to delay any expansion plans possibly being considered.

The economic slowdown that hit the PVC sector particularly hard in 2001 is apparently past. PVC's fortunes are tied to construction, and this industrial activity has been doing well since last year and continues to improve. Housing starts in September 2003 were at a seasonally adjusted annual rate of 1,888,000. This is 4.3 percent above the September 2002 rate of 1,810,000. No new PVC capacity is expected to be built over the forecasted period, so continued modest growth should maintain a balanced market. Aggregate annual growth over the next four years is projected at 2.8 percent.

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