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U.S. PVC prices set to rise in 2014

U.S. prices for polyvinyl chloride (PVC), the plastic most widely used in construction, are set to rise by 5 cents per lb. 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. Also supporting these rising prices are the stronger prices for ethylene used to make PVC as well as PVC export markets.

“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 the report.

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 lb.

Steady U.S. PVC exports in recent months have kept domestic availabilities balanced too 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 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 U.S. housing recovery, the PVC & Pipe Report noted. Producers have proposed a 3-cent-per-pound hike for January followed by a 2-cent-per-pound increase for February 2014.