US PVC producers splinter in price hikes for July, August contracts

17 June 2011 19:07  [Source: ICIS news]

HOUSTON (ICIS)--One US polyvinyl chloride (PVC) producer has spread a 5 cent/lb ($110/tonne, €78/tonne) increase in contracts over the months of July and August, instead of the 5 cent/lb hike announced for July by other PVC producers, sources said on Friday.

This breakaway move indicates that PVC producers are not in unison on the increase, in comparison to how they generally announce price announcements.

April PVC contracts are at 50.50–55.50 cents/lb for pipe and 52.50–57.50 cents/lb for general-purpose material, as assessed by ICIS.

A 5 cent/lb May increase is likely holding in the market, although full market consensus was not yet reached for this week.

For June, pricing will likely remain flat, according to some sources.

Initially, some PVC producers announced another 5 cent/lb increase for June contracts on top of the May increase, but a major producer deviated from the rest to abstain from announcing in June and announced the 5 cent/lb increase for July instead.

This caused at least one PVC producer to delay its June announcement to July as well.

This latest split of the 5 cent/lb increase by the most recent nominating producer has continued to shift the PVC contract landscape.

“[The] announcement was a very responsible way to respond, but still it has very little chance of success,” one PVC buyer said. 

The source said that as a result of the split, deals of less than 3 cents/lb for July will likely be made, and August contracts could settle on a rollover. But those scenarios assume supply stays in balance and feedstock ethylene does not go too high.

Another PVC source said that these recent announcements indicate that the market appears to be lengthening, likely as a result of softening demand in exports.   

Major US PVC producers include Shintech, Formosa Plastics, Westlake, Oxy Vinyls and Georgia Gulf.

($1 = €0.71)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy
For more on polyvinyl chloride visit ICIS chemical intelligence

By: Ruth Liao
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