US consumption of PVC to grow by 5.9% yearly until 2025 - economist

24 June 2011 04:56  [Source: ICIS news]

SINGAPORE (ICIS)--The consumption of polyvinyl chloride (PVC) in the US is expected to grow by 5.9% annually from 2010 to 2025 in line with the country’s continued recovery in its economy and domestic housing, an economist said on Friday.

PVC consumption in the US is forecasted to surge from 3.93m tonnes in 2010 to 6.72m tonnes in 2015 and will continue to grow to 9.24m tonnes in 2025, said Fred Peterson, chairman of US-based Probe Economics.

He was speaking at the sidelines of The 15th World Chlor-alkali Conference in Singapore, which is held on 23-24 June.

The recovery of the US economy, which is forecasted to grow at a relatively slow pace of around 3% per year in 2010-2015, is expected to boost the domestic housing market that will in turn boost the country’s consumption of PVC, Peterson said.

In addition, the recovery will absorb the inventory build-up of PVC caused by the slump in the US housing market, he added.

“We are not heading for a double dip, but the economy is expected to be slower this year,” Peterson said.

He added that it will take around three to four years for the supply overhang in the domestic housing market to be absorbed.

“It will get worse in terms of [house] pricing… Prices will be depressed more, but the levels of housing starts we have now are quite stable,” Peterson added.

The overall yearly PVC production capacity in the US totalled 8.12m tonnes in 2010 and is expected to grow to 10.2m tonnes in 2025, according to Peterson.

In addition, the country’s capacity utilisation of PVC will increase from 78% in 2010 to an estimated 91% in 2025, supported by a higher domestic consumption of the material, he said.

However, exports of PVC from the US will decline from 2.64m tonnes in 2010 to 454,000 tonnes in 2025, Peterson said, without adding further details.

Major PVC producers in the US include Formosa Plastics Corp (FPC), Georgia Gulf Corp., PolyOne, OxyVinyls, Shintech and Westlake Chemical.

Export prices are at $1,050-1,150/tonne (€735-805/tonne) FOB (free on board) USG (US Gulf) as assessed by ICIS.

The prices have dropped by more than $100/tonne since early June.

($1 = €0.70)

For more on polyvinyl chloride, visit ICIS chemical intelligence
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By: Nurluqman Suratman

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