Price and market trends: Caustic soda, PVC price hike should be implemented – Axiall CEO

17 May 2013 09:51  [Source: ICB]

Executive believes ethylene feedstock prices will increase during the rest of 2013, putting pressure down the chain

US-based petrochemical producer Axiall expects to implement some portion of an announced price increase for caustic soda in the 2013 second quarter, but how that works in conjunction with a polyvinyl chlorine (PVC) price increase remains in question, CEO Paul Carrico said on 8 May.

Carrico also told analysts Axiall expects the cost of ethylene, a primary feedstock for vinyl derivatives including PVC, to increase in each of the remaining quarters of 2013, similar to the 3.5 cent/lb ($77/tonne, €59/tonne) increase seen in the first quarter.

Carrico made his comments to in a first-quarter earnings call, the first such call since the company was formed in January by a merger of the former Georgia Gulf with the chlor-alkali segment of PPG Industries.

On 7 May the new company reported first-quarter adjusted net income of $45.1m, compared with $27.6m in Q1 2012. Net sales in Q1 2013 were $1.1bn, compared with $859.9m reported for Q1 2012, the company said.

Carrico told analysts he expects the market to bear at least some of the price increases that are on the table for caustic soda, chlorine and PVC.

"I think the chlorine price [increase] was derailed a couple of times in terms of a delay," Carrico said, particularly because of a slow start in the water treatment demand sector and a fitful start to the US construction sector, a primary demand segment for PVC.

"On the caustic side, I believe there's further interest in getting some of that increase through to offset what's not being seen in chlorine," he said.

"We believe there's certainly the dynamics to support that. We'll just have to see what the industry does in terms of implementation."

Carrico said it remains unclear how the nascent recovery in the US home-building sector will play out through the rest of 2013, which will impact demand for PVC and other vinyl products.

By: Ken Fountain

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