US PVC buyers say they can absorb some of 15 cents Q1 increases

19 February 2010 21:37  [Source: ICIS news]

HOUSTON (ICIS news)-- US polyvinyl chloride (PVC) buyers said on Friday they could absorb a January price hike but had a dimmer outlook on similar increases for February and March.

“We can pass on the first five-cents in January, but cannot follow up on another the next month,” one smaller volume buyer said.

US PVC producers announced 5 cents/lb ($110/tonne, €80/tonne) in January, with the same amount sought by each producer in February and March - a total of 15 cents/lb for the first quarter.

One PVC buyer said it had not passed on higher costs to its customers for some time and was confident it could implement the effects of the January resin increase in its March invoicing.

A pipe-grade resin buyer said there was a demand spike in the plumbing segment late in the fourth quarter that helped sustain margins.

But buyers said the extension of the $8,000 federal tax credit for home purchases in 2010 did not encourage PVC players to expect a “residential frenzy”.

PVC buyers were cautiously optimistic that some of the February increment could be passed on, if the increase sticks and this becomes necessary. 

But the 5 cents/lb March increase drew few positive remarks from PVC downstream buyers, other than it could stimulate some pre-buying interest.

Following implementation of the January increase, US PVC contract prices were assessed in a 68-70 cents/lb spread for pipe-grade and 72-74 cents/lb for general purpose, according to global chemical market intelligence service ICIS pricing.

As one buyer put it, “unless the economy takes off, good luck,”

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

US PVC buyers include most municipal pipe and construction companies as well as vinyl product manufacturers of flooring, fences and other home construction goods.


For more on PVC, visit ICIS chemical intelligence
To discuss issues facing the chemical industry, go to ICIS connect

By: Judith Taylor
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