Unclear ethylene pricing clouds US March, April PVC contracts

12 March 2010 18:04  [Source: ICIS news]

HOUSTON (ICIS news)--The fate of US polyvinyl chloride (PVC) contracts is unclear due to uncertainties in the upstream ethylene market, sources said on Friday.

US PVC suppliers have a 5 cent/lb ($110/tonne, €80/tonne) March increase under negotiation, and at least two fresh 5 cent/lb April initiatives emerged this week.

Two producers confirmed April announcements, while other PVC producers had yet to clarify positions.  

Skyrocketing ethylene costs were the driver on the March and April increases, along with the earlier January and February PVC hikes.

Ethylene prices rose over 12 cents/lb between July and December 2009, with January and February contracts settling last week at a combined total of 9.50 cents/lb – up 6 cents/lb for January and 3.50 cents/lb for February.

A 5 cent/lb increase was implemented on PVC in January and another 5 cents/lb hike is gaining confirmation as implemented in February, according to buyers and sellers.

If implemented, the February increment would bring suppliers’ increase achievement to 10 cents/lb of 15 cents sought for the first quarter.

Suppliers said the 15 cents/lb increases for the first-quarter were necessary in order to cope with sharply rising ethylene costs.

The ethylene price picture is mixed, however.

On the one hand, supply continues be constricted due to a rash of planned and unplanned cracker outages and at least one force majeure in effect.

However, PVC buyers and other market participants said the expectation is that the tight ethylene situation would begin to ease in late March or early April, as the crackers come back on line to refresh supply.

PVC buyers have balked at the March increase and left it struggling to gain traction, sources said.

The emerging 5 cent/lb April initiatives would enter the market at the cusp of rising seasonal demand for PVC, as home improvement and other construction projects typically get underway.

PVC buyers said the credit crunch is ongoing and stands in the way of many projects becoming reality, making them wary of taking any more increases on the resin.

Following the January increase, US PVC contract prices for pipe-grade material ranged 68-70 cents/lb delivered, while the general-grade resin spread was assessed at 72-74 cents/lb delivered, according to global chemical market intelligence service ICIS pricing.

US PVC producers include Formosa Plastics, Georgia Gulf, Dow Chemical, Occidental Chemical, Shintech and others. US PVC buyers include most municipal pipe and construction companies.

($1 = €0.73)

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


By: Judith Taylor
+1 713 525 2653



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