Chemical Profile: Polyvinyl chloride

11 September 2006 00:00  [Source: ICB Americas]

DEMAND

2004: 15.3bn pounds 2005: 15.75bn pounds 2009: 17.59bn pounds, projected. Demand equals production plus imports (2004: 799m pounds 2005: 1.042bn pounds) less exports (2004: 1.919bn pounds 2005: 1.851bn pounds).

GROWTH

Historical (2000-2005): 2%/year. Future: 2.8%/year through 2009.

PRICE

Historical (2000-2005): High, 66 cents/lb., PVC resin, pipe-grade, bulk, Gulf low, 23 cents, same basis. Current: 54.5-57.5 cents, same basis.

USES

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

Construction, 77% (pipe and tubing, 47% siding, 15% windows and doors, 6% other construction, including flooring and pipe fittings, 9%) consumer goods, 7% packaging films and containers, 6% electrical fittings and wire and cable coatings, 5% transportation, 2% home furnishings, 1% miscellaneous, 2%.

MARKET PERSPECTIVE

PVC is the second-largest (after polyethyl-ene) and most versatile of all thermoplastics. The construction industry accounts for nearly 80% of its demand. Hence, demand correlates closely with economic growth or decline. After two years of decline in 2000 and 2001, the US PVC business revived in 2002 - demand in 2002 was up 6% over the previous year. This activity has carried forward to the present time, riding on new home construction and after-sale remodeling of existing homes. PVC operating rates are now about 92% of capacity.

Higher crude oil prices have also given PVC an edge over other thermoplastics, like high-density polyethylene. Above $50/bbl of crude oil, PVC begins to have a cost advantage in applications such as containers.

Pricing this year has declined 6.5 cents/lb. since last December, after prices climbed 13.5 cents/lb. throughout 2005. This is apparently due to a correctional slowing in the construction segment. In August, the Census Bureau reported that housing-starts in July 2006 were down 2.5% from the previous month and down 13.3% from one year ago. Real gross domestic product (GDP) grew at an annual rate of 2.9% in the second quarter of 2006, following a 5.6% growth rate in the first quarter.

OUTLOOK

PVC producers are currently enjoying healthy margins. Supply is tight, inventories are low, world demand is growing at 6%/year. The 600m lb./year restart by Geismar Vinyls at Geismar, La., last December was somewhat offset by the closure of OxyVinyls' 350m lb./year plant in Alberta. Shintech's new plant at Plaquemine will add another 7% to the supply side capability, depressing the segment's operating rate to about 88%. PVC's aggregate annual growth over the next four years is projected to be 2.8%.

NORTH AMERICAN PVC CAPACITY

MILLIONS OF LBS/YEAR

Company Location Capacity*
CertainTeed Lake Charles, La. 475
Colorite Specialty Resins Burlington, N.J. 120
Dow Chemical Texas City, Tex. 140
Formosa Plastics Baton Rouge, La. Delaware City, Del. Illiopolis, Ill. Point Comfort, Tex. 2,935
Geismar Vinyls Geismar, La. 600
Georgia Gulf Aberdeen, Miss. Oklahoma City, Okla.Plaquemine, La. 2,730
OxyVinyls Deer Park, Tex. Louisville, Ky. Pasadena, Tex.Pedricktown, N.J. 3,675
PolyOne Henry, Ill.Pedricktown, N.J. 245
Shintech Addis, La.Freeport, Tex. Plaquemine, La. 4,900
Westlake PVC Calvert City, Ky. 800
US Total 16,620
OxyVinyls Niagara Falls, Ontario 575
Royal Group Technologies Sarnia, Ontario 475
Canada Total 1,050
Policyd Altamira, LaPresa 410
Polimeros de Mexico San Martin Moyotzingo, Xicotzinco 160
Primex Altamira 660
Mexico Total 1,230
TOTAL 18,900

SOURCE: ICBA*Millions of lbs./year polyvinyl chloride (PVC). PVC is manufactured from vinyl chloride monomer (VCM) by any of four distinct processes: emulsion, mass, solution or suspension polymerization. The different processes yield resins having different physical properties. More than 90% of the PVC produced in North America is by the suspension route.Shintech is planning to start up the first phase of its integrated vinyls complex at Plaquemine, La., by the end of the year. It will include 660m lbs./year of PVC, 545m lbs./year of chlorine, 600m lbs./year of caustic soda, and 1.1bn lbs./year of VCM. When the complex is completed in late 2007, its capacities will be: 1.3bn lbs./year of PVC, 1bn lbs./year of chlorine, 1.1bn pounds of caustic soda, and 1.65bn pounds of VCM.Last month Georgia Gulf announced it would add 450m lbs./year of PVC capacity to its plant at Plaquemine, La., by 2008. In June, Georgia Gulf announced its intention to acquire Royal Group Technologies, with its 475m pounds of PVC capacity. The transaction is expected to close later this month.In January, OxyVinyls closed its 350m pound PVC plant in OxyVinyls, Fort Saskatchewan, Alberta. In January 2005, Occidental Chemical closed its 220m pound PVC plant in Pottstown, Penn., which provided material for specialty PVC resins, a business OxyChem decided to exit.CertainTeed is a subsidiary of Saint-Gobain. Colorite Specialty Resins is a division of Tekni-Plex. Geismar Vinyls and Westlake PVC are subsidiaries of Westlake Chemicals. OxyVinyls is a 76/24 joint venture between Occidental Chemical and PolyOne. Shintech is the North American operating company of Shin-Etsu Chemical (Tokyo).

Profile last published November 17, 2003

This revision, September 11, 2006

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