PVC prices rising, nylon continues climb

PVC resin prices regained some momentum in August and September, while nylon resin prices have continued to climb in recent months. Average selling prices for PVC rose a total of 2 cents per pound in the August-September period, as strong demand overcame market resistance that had delayed a July increase. U.S./Canadian PVC prices now are up an average of 11 cents per pound in 2004, also reflecting higher prices for crude oil and natural gas feedstocks and tight supplies of vinyl chloride monomer.

Another factor lifting PVC prices in 2004 has been production discipline on the part of PVC makers, a Texas-based PVC buyer said. PVC makers “used to run full-out just because they could, but not anymore,” the buyer said. “Right now, resin inventories are below 10 days. There’s more [PVC] pipe inventory than resin inventory.”

North American PVC makers also are exporting more resin, taking excess material out of the market, another Texas-based PVC buyer said. But PVC makers still had to tone down more-ambitious price hikes, the second buyer added.

“There was some thought that [PVC makers] were going too fast when they were nominating 2 or 3 cents a month, especially when pipe companies were only getting about half of that from their customers,” he said. “The resin companies were a lot more successful by going after 1 cent at a time.”

One source with a PVC supplier predicts continued tightness in the PVC chain, particularly with some North American VCM set to cease production at the end of 2005. Total PVC inventories have declined by 700 million pounds since January 2001, with 250 million pounds of that amount being reduced in the past nine months, the source said.

PVC makers now aim to raise prices by 1 cent per pound as of Nov. 1. Oxy Vinyls LP and Georgia Gulf Corp. had initiated October increases, but they pulled those back and instead matched a Nov. 1 hike announced by Shintech Inc., market sources said.

In the first half of 2004, U.S./ Canadian PVC sales were up almost 9 percent, according to the American Plastics Council in Arlington, Va. Growth in the rigid pipe and tubing segment — accounting for 42 percent of total sales — was near 9 percent as well, while export sales climbed more than 14 percent.

Over in nylon, prices are up 10 percent since August, according to several buyers. For nylon 6, that works out to an increase of about 13 cents per pound, while in nylon 6/6, the recent increase totals about 14 cents per pound.

Combined with an earlier price increase, average nylon prices have climbed about 20 percent in 2004, according to the Plastics News resin pricing chart. Prices for benzene — a key feedstock used to make nylon precursor cyclohexane — are hovering around the $4 per-gallon mark. That level is more than triple its level of a year ago.

Nylon resin makers achieved the increases even though North American auto sales were roughly flat through September when compared with their 2003 levels.

The automotive market accounts for about 40 percent of North American nylon resin consumption. North American automakers in particular were hard hit through September. Ford Motor Co.’s North American output was down more than 5 percent in that period, while General Motors Corp. saw its level drop almost 7 percent.

As a result, North American nylon sales into the automotive and truck segment are down more than 8 percent this year, even though total sales are up almost 5 percent, according to APC. Almost all of this year’s North American growth has been in sales to resellers, distributors and compounders. That segment is up almost 40 percent.