U.S. prices for polyvinyl chloride (PVC), the plastic most widely used in construction, are set to rise by five cents per pound in the first two months of 2014. This is a significant price increase in a market that will see producers end the year with a net five-cent increase in their 2013 margins, according to PetroChem Wire‘s PVC & Pipe Report.
These higher raw material costs could have a significant impact on prices for many consumer goods, most notably plumbing pipe and vinyl siding.
Stronger prices for the ethylene used to make PVC and strong PVC export markets are supporting the upward momentum in PVC pricing, according to the weekly newsletter.
“PVC prices are usually under pressure during the fourth quarter as market seasonality kicks in and demand drops, but this year rising spot ethylene prices and strong export demand kept a floor under the market,” according to Donna Todd, senior editor for PVC & Pipe for PetroChem Wire.
“Prices dropped by one cent per pound for October and were flat for November, and producers are confident they will be able to hold prices level for December as well,” according to Todd.
U.S. ethylene prices reached a 2013 low of 43.5 cents per pound in early October, but rose steadily since then, ranging between 55 to 57 cents per pound in early December. The price of pipe grade PVC, which was at a 2013 low of 53.5 cents per pound at the beginning of the year, is now 58.5 cents per pound, according to the PVC & Pipe Report.
Steady U.S. PVC exports in recent months have kept domestic availabilities balanced to tight. The U.S. PVC export market has been quiet recently as producers appear to be sold out of material for December and only a few traders have product. Those traders with material have been putting a high price on new deals and are ready to hold their positions until January if necessary in order to realize their price objectives.
The pipe segment of the market is by far the largest consumer of PVC, but its many other end-uses include siding, gutters, window framing and everything from flooring to furniture to medical tubing.
The five-cent PVC increase announced for early next year is expected to be very difficult for converters, particularly pipe manufacturers, to pass along based on the tenuous state of the U.S. housing recovery, Todd said. Producers have proposed a three cent-per-pound hike for January followed by a two cent-per-pound increase for February.
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