December US housing starts rise 1.4% on month: US Census

US housing starts in December rose 1.4% from November and 2.5% from December 2020, according to data the US Census Bureau released Jan. 19.

Housing starts reached 1.702 million units, up from 1.678 million units in November and 1.661 million units in December 2020.

Building permits for privately owned housing units also surged 9.1% to 1.873 million units in December from 1.717 million units in November and 6.5% from 1.758 million units in December 2020, the data showed.

Polyvinyl chloride market participants closely watch housing starts data to gauge domestic demand for the construction staple, which is used to make pipes, window frames, vinyl siding, and other products. Domestic PVC demand usually declines during colder months, when construction activity wanes, but demand for housing began rising sharply in June 2020 after coronavirus-related shutdowns eased in the US, and remained strong through the winter of 2020-2021 and the current winter.

December's housing starts were the second-highest of 2021 behind 1.725 million units in March when construction surged after a deep freeze that hit the US Gulf Coast and much of the inland US in mid-February crushed much of that activity. Market sources said at the time that the March surge compensated for the sharp slowdown in February.

"Domestic demand is still very healthy," a market source said.

Domestic PVC prices were last assessed Jan. 12 at 99.5 cents/lb ($2,193.50/mt), a record high since S&P Global Platts began assessing the market in 2001, Platts data showed. Prices have risen 52.5 cents/lb ($1,157/mt) since June 2020 as housing demand rose.

The four US PVC producers have announced repeated price increases since June 2020, and most have been accepted by the market, largely because buyers had few, if any, alternatives to US material.

Asian PVC prices have largely been lower, but a container squeeze and record-high freight rates left Asian volumes uncompetitive globally until prices began declining sharply in recent weeks. Europe has experienced tight PVC supply as well as sharply higher upstream energy prices in recent months.

Formosa Plastics USA Jan. 11 announced a 3 cents/lb ($661/mt) price increase, effective Feb. 1, but market sources were skeptical that it would be accepted, given the rise in prices since mid-2020. "That will be a tough sell," a source said.