USA’s leading petrochemical and resin supplier, Formosa Plastics Corporation, on September 13, announced a hike of 5 cents/lb of domestic Polyvinyl Chloride (PVC) with effect from September 15, 2021. This increase came as an addition to the recent escalation of 2 cents/lb in Poly Vinyl Chloride price which got effective from September 01, 2021. Formosa has a PVC plant facility of 513 KTPA capacity at Baton Rouge, Louisiana that had recently resumed operation after a temporary stop in the wake of Ida’s landfall.

Formosa’s announcement followed a series of force shutdowns of five major PVC producing plants, covering 41% of the USA’s total installed capacities, on account of damages by Ida’s landfall. A few days later, Shintech also decommissioned its 1450 KTPA Poly Vinyl Chloride plant at Freeport, Texas, after struggling with low supplies of the upstream feedstock vinyl chloride monomer (VCM) which was provided by Olin’s 835 KTPA VCM plant that had to close down due to equipment failure.

Poly Vinyl Chloride is a durable and economical form of plastic that has innumerable applications in our day-to-day lives. Its moisture and abrasion resistance makes it a preferred choice for building leak-free pipes, window frames, wirings, and cables. It is also rigorously used in medical setups for manufacturing blood collection bags and medical tubing. The packaging and household commodities sector also exploit PVC to a huge extent. 

The prices of Poly Vinyl Chloride in the USA have been on their high lately, due to the rebounding of construction works, and the increase in the building of workspaces at home under the new work-from-home regime post-COVID19 pandemic. The ongoing price of Poly Vinyl Chloride on September 8 was valued to be 91.5-93.5 cents/lb after the inflation of 45.5 cents/lb since June 2020 which is backed by the declining PVC supplies. 

As per ChemAnalyst, the decommissioning of several major plant facilities in the USA has created a shortage in domestic PVC supplies. Post-Ida, the production in the USA have not gained pace yet. This has become an opportunity for companies like Formosa to generate high revenues amidst the tightened PVC supplies in the USA that is expected to linger for a few months subsequently resulting in the inflation of PVC-based commodities rates. The international market must also brace itself to bear the effects of the USA’s low Poly Vinyl Chloride production and supply shortages in the coming months.