US prices for polyvinyl chloride (PVC), the plastic most
widely used in construction
, are set to rise by 5
cents/lb in the first two months of 2014, according to
's new PVC & Pipe Report.
This is a significant price increase in a market that will
see producers end the year with a net 5-cent increase in
their 2013 margins, the report finds.
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," said Donna Todd,
senior editor for PVC and 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," she added.
US ethylene prices reached a 2013 low of 43.5 cents/lb in
early October, but rose steadily since then, ranging between
55 to 57 cents/lb in early December. The price of pipe
grade PVC, which was at a 2013 low of 53.5 cents/lb at the
beginning of the year, is now 58.5 cents/lb, according to the
PVC & Pipe Report.
Steady US PVC exports in recent months have kept domestic
availability balanced to tight. The US 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
The 5-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 US housing recovery, Todd said. Producers have
proposed a 3-cent/lb hike for January followed by a 2-cent/lb
increase for February.