US PVC January contracts up 5 cents on higher ethylene costs

12 February 2010 21:14  [Source: ICIS news]

HOUSTON (ICIS news)--US polyvinyl chloride (PVC) contract prices rose 5 cents/lb ($110/tonne, €80/tonne) for January business as feedstock ethylene costs increased, buyers and sellers confirmed on Friday.

All US PVC producers announced the 5-cent January initiative and quickly followed with announcements of the same amount for February.

One March announcement, also at 5 cents, was confirmed active this week, but other producers had yet to clarify positions.

Ethylene costs are the driver, all the way,” a vinyls buyer said.

Buyers recognised that suppliers were challenged by a rise of at least 12 cents/lb in ethylene costs between October and December, sources said.

Amid the sharp upward push in feedstock costs, suppliers were able to achieve broad implementation at the full amount of the increase, even in the huge vinyls sector that had successfully resisted increases during the fourth quarter, vinyls buyers said.

Implementation of the 5-cent increase brings the January assessment for US PVC contracts to 68-70 cents/lb for pipe-grade material and 72-74 cents/lb for general purpose, according to global chemical market intelligence service ICIS pricing.

In ethylene, producers sought a 7.5 cents/lb increase for January contracts, but buyers balked, leaving an opening for a January/February settlement, although February price expectations have not yet surfaced.

Ethylene contracts were last assessed in December at 43 cents/lb, up 1.75 cents/lb from November, according to ICIS pricing.

PVC uses ethylene and chlorine as main production components. Chlorine supply is largely integrated from basic chlor-alkali processes, whereby caustic soda and chlorine are co-produced via the application of electricity to salt water.

Most PVC producers are also chlorine producers, but not all.

US PVC producers include Formosa Plastics, Georgia Gulf, Westlake Chemical and Shintech, among others.

($1 = €0.73)

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By: Judith Taylor
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