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Formosa Plastics restarts Texas PVC plant post-turnaround


Shintech begins PVC turnaround at Texas complex

Coronavirus uncertainty siphons international PVC demand

Houston — Formosa Plastics USA has restarted its 798,000 mt/year PVC plant in Texas after planned work, while Shintech has launched a turnaround at its 1.4 million mt/year PVC complex, also in Texas, according to sources familiar with the companies' operations.

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Formosa's Point Comfort plant was expected to reach normal rates by early April, a source close to the company said.

The company did not immediately respond to a request for comment.

Shintech's planned work on one of the trains at its Freeport complex was underway on Wednesday and expected to last through most of April, the source familiar with that company's operations said.

Shintech did not respond to a request for comment.

Formosa also has postponed a May PVC turnaround at its 513,000 mt/year facility in Baton Rouge, Louisiana to this summer, with the target start date yet to be determined, the source familiar with the company's operations said.

Formosa's resumption of output at Point Comfort comes at an uncertain time for PVC producers and traders, as demand grows more uncertain amid the global coronavirus pandemic. Market sources said some customers that regularly buy US PVC exports have canceled or rescheduled orders, unsure of what demand will be like in the coming weeks and months.

"We ... face a lot of requests for cancellation and shipment rescheduling," a market source said. "We may be at the moment to stop to move forward."

PVC, a construction staple used to make pipes, window frames, vinyl siding and flooring and other products, is closely tied to economic health and GDP growth. About 60% of PVC output is used to make construction supplies, and the rest is used to manufacture other goods, such as intravenous fluid bags and medical tubing.

US export PVC prices fell to $502/mt FAS Houston in November 2008 from a high of $1,290/mt FAS in July that year amid the global financial crash, and reached $1,250/mt in April 2011 as construction activity recovered. Prices have not reached that level since and were last assessed March 18 at a near two-year high of $850-$860/mt FAS, S&P Global Platts data showed. Nearly 38% of all US PVC production was exported in 2019, US International Trade Commission data show.

India lockdown adds uncertainty for PVC exports

This week India's Prime Minister Narendra Modi announced a nationwide lockdown from Wednesday for 21 days in an effort to slow the spread of the coronavirus in the world's second-most populous country, which has 1.3 billion people. The lockdown applies to ports, which will slow imports of all kinds of goods, including PVC, to a country that was dependent on PVC imports to meet demand before the pandemic gripped the globe.

Other countries and regions have similar lockdowns in place with exceptions for critical infrastructure, which includes chemical plants and ports. Those include Italy, which is among the global epicenters of the disease, and Spain. Germany was expected to issue similar stay-at-home orders as well, sources said.

In the US, several states, including hard-hit California and New York, have issued similar orders. Louisiana, home to major oil, natural gas and chemicals infrastructure, has an order in place, while Texas does not, although on Tuesday Houston and Harris County issued their own stay-at-home orders with similar critical infrastructure exemptions.

While construction is among those exemptions, US sources said coronavirus uncertainty was siphoning export demand and could do the same for domestic demand ahead of the peak summer season.

"Nobody wants to buy anything additional, especially for early April shipments," a market source said. "Some people are being cautious and canceling part of their orders, but not so much, both domestic and export."

US producers had sought 3 cents/lb price increases for domestic PVC for February, but sources said 2 cents/lb was accepted. The domestic market had already accepted a 3 cents/lb increase in January, and domestic demand had been seen as strong through mid-March, which is the typical buying season ahead of peak construction during warmer months.

The source said some international customers were placing May orders, but that could stem from low inventory, and India's lockdown sparked more worry about future demand.

Some market sources said export prices would have to fall by as much as $100/mt to solicit April business.

"The market is showing some, not strong, interest in buying PVC resin at $100-150/mt down from the March shipment price," a source said.