Material Cost Update (PVC) – August 2017
Earlier this month, Formosa declared force majeure sales limits on specific PVC resins. At first glance, the force majeure seemed to apply only to certain resins, which likely would not cause significant disruption for PVC compounds, processors, or end users – unless, of course, the force majeure period is significantly long or another disruption occurs in the industry.
However, talks are beginning about whether the force majeure could drive up PVC costs in the coming weeks. Typically, PVC prices would be falling due to prices dropping for ethylene, which is a component of PVC compounds. However, the combination of the Formosa force majeure and possible upcoming supply issues from Shintech, who has also experienced mechanical issues, is causing concern around the industry. While Shintech’s customers have not reported delivery issues, some are questioning whether continued supply issues – especially as we head into a busy construction season – could affect PVC costs. For more about these concerns, check out Plastic Technology’s article “Price Hikes Underway for PE; One Could Emerge for PVC“.