Formosa Plastics, Westlake seek July price rise on top of June increase
Demand shows signs of rebounding after plunging on pandemic concerns
Petrotahlil - At least two US polyvinyl chloride producers have announced price increases for domestic material in July on top of increases announced last week for June material, according to customer letters S&P Global Platts obtained.
Formosa Plastics USA and Westlake Chemical this week announced 3 cents/lb price increases to be effective July 1. They and the other two US PVC producers, Shintech and OxyChem, announced 3 cents/lb price increases to be effective June 1 as well.
Market sources said Wednesday that Shintech and OxyChem had yet to announce July price increases. Neither company responded to requests for comment.
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Sources said domestic demand was seen strengthening after a rapid retreat in late March and April as coronavirus pandemic-related shutdowns and stay-at-home orders sapped construction activity. PVC is a construction staple used to make pipes, window frames, vinyl siding, and other products.
The domestic market had approved a cumulative 5 cents/lb in price increases in February and March, but prices fell by that amount in April as customers canceled orders and avoided building inventories amid uncertainty of when demand would rebound.
Domestic PVC buyers typically bulk up on product in March and April ahead of the peak summer construction season, but pandemic fallout gutted that flow this year.
April US housing starts fell 30.2% from March to their lowest seasonally adjusted level since February 2015, US Department of Commerce data released May 19 showed. Authorized building permits for new homes fell 20.8% from March, and home completions were 8.1% lower than those in March, the data showed.
In addition, more than 38 million people have sought unemployment benefits since the pandemic battered the US economy, putting the April unemployment rate at 14.7%, the highest since the Great Depression.
But US states and many urban centers have lifted or softened stay-at-home orders in May, and PVC demand has shown signs of rebounding. Market sources said the June price increase was expected to be accepted.
But a source said Wednesday that the July increase may be too much too soon. "I don't know if that's going to fly, the July increase," the source said.
Domestic PVC prices were largely stagnant throughout 2019.