US Axiall expects PVC margins to remain restrained in near term

01 August 2013 23:46  [Source: ICIS news]

HOUSTON (ICIS)--US-based integrated chemicals firm Axiall expects polyvinyl chloride (PVC) margins to remain restrained in the near term, despite forecasts of a robust PVC market as housing picks up, a company executive said on Thursday.

“I don't know whether it's the speed of the housing or there's a delay factor, but that type of demand realisation did not really play out this year,” said Paul Carrico, CEO at Axiall.

“In fact, I think the current number is about 2% in terms of growth year-over-year, which is well below most forecasters in terms of their earlier projections at the beginning of this year,” he said during a conference call on the company’s Q2 earnings.

According to Carrico, PVC margins have typically improved as industry operating rates start to exceed 90% on a regular basis, but operating rates have remained below that level for most of the year as domestic demand increased only slightly and export demand has remained sluggish.

“This is clearly a different environment than we expected at the beginning of the year, and this type of environment may continue for the remainder of the year,” he said.

While housing has picked up, many new homes are still in the foundation and framing stage, Carrico said.

Still, PVC demand has increased because the piping segment is up year-over-year, he added.

“I would also say that it should get here sooner or later whenever housing does get a little bit more momentum or houses get to the point where they start using our materials,” Carrico said.

Axiall reported a net income of $72.8m (€54.6m) for the Q2 2013, up from $13.6m in the same period last year.

($1 = €0.75)

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By: Tracy Dang
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