Market outlook murky on Georgia Gulf’s FM on PVC

15 April 2011 20:07  [Source: ICIS news]

HOUSTON (ICIS)--The full extent of US Georgia Gulf’s force majeure (FM) on the polyvinyl chloride (PVC) market remained unclear Friday, sources said.

According to a letter sent to customers on Thursday, Georgia Gulf said the chlor-alkali outage at its Plaquemine Louisiana plant was caused by “an electrical malfunction that will require significant repairs”.

The company cited reduced ethylene supply and reduced chlorine operating rates as the reason for the declaration of the FM.

Operating rates of the Plaquemine facility were reduced by 33%, the company said.

One PVC market participant said the impact of the FM would depend on the kind of allocation established by Georgia Gulf.

“I think it won’t be the end of the world,” the source said.

In response to a question asking whether PVC resin would still be sold to the export market, Georgia Gulf told customers that many would be affected by sales allocations and would be handled in a fair and equitable manner.

Another market participant said the US PVC market appeared to have adequate capacity, but since producers have sought more lucrative pricing in the export markets on strong demand, the perception of tightness still existed.

“If they suddenly overcommitted themselves on exports, that’s the real rub,” the source said.

US PVC exports were assessed at $1,170-1,250/tonne FOB USG.

On Friday, Georgia Gulf shares briefly dropped as much as 8% before making up most of the morning’s losses.

Georgia Gulf stock was trading at $37.23 as of 12:37 hours Houston time (17:37 GMT) on the New York Stock Exchange.

Georgia Gulf shares have increased substantially since last November, when stock price was $17.43 and has escalated since then.

($1 = €0.69)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the EconomyFor more on Georgia Gulf’s Plaquemine plant visit ICIS plants and projects
For more on polyvinyl chloride visit ICIS chemical intelligence

By: Ruth Liao
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