Growth recorded n North American PVC sales, while PET markets sees domestic decline

20-Nov-13

North America’s PVC suppliers have seen growth in export sales, offsetting stagnation in the domestic market. Domestic PVC processors were impacted by the recession, leading to barely 55-65% operating rates of pipe and siding companies, according to IHS’s PVC Steve Brien. The region’s PET manufacturers are, however, still suffering from a local decline in the carbonated drinks sector, as Plasticnews.com. “But PVC resin has operating rates of around 90% – and low inventories could tighten the market,” he added. Domestic PVC makers also could reduce the amount they’re selling as exports to meet rebounding demand from the domestic field. Much of this growth will come from the US construction market. Overall North American PVC demand growth is expected to increase from less than 1 percent in 2013 to almost 3% in 2014. Regional operating rates are expected to improve from about 87% to almost 90% in that same comparison. The North American PVC field also stands to benefit from increasing development of shale gas in the region, which can be used to make PVC feedstock ethylene. There’s been much speculation that this increased feedstock supply could lead to more PVC capacity for North America. Mexichem is adding almost 400 mln lbs of PVC in Mexico this year, while on the US Gulf Coast, Westlake Chemical will add about 180 mln lbs in 2014 and Shintech will add almost 700 mln lbs in 2016. There exists a gap of over 6 mln lbs between the amount of ethylene capacity that’s set to be added and the amount of new polyethylene resin capacity that’s been announced. Even without expanding, US PVC has the advantage in cash costs. US PVC makers “can make PVC here and ship it to any other part of world and be competitive,” Brien said. “I definitely think there will be more [North American PVC] expansions announced sooner than later.” North American PET, on the other hand, doesn’t really benefit from shale gas, but is adding large chunks of capacity nonetheless, as the region’s major suppliers work to assert themselves through integration. Announced expansions – including a major one by M&G Group in Corpus Christi, Texas – will add about 3.5 mln lbs of capacity to a North American market that currently operates about 8.4 mln lbs.