Taiwan PVC Makers May Raise Jan. Prices on Construction Demand

By Yu-huay Sun

Dec. 12 (Bloomberg) -- Formosa Plastics Corp. is among Taiwanese makers of polyvinyl chloride that may raise prices for the plastic material by as much as 7 percent next month on expectations of higher demand from construction companies.

Suppliers are offering PVC to be delivered to China in January at $630 to $640 a metric ton, an increase of $30 to $40 from previous quotes, said David Liu, a spokesman for Taipei- based China General Plastics Corp., Taiwan’s second-biggest maker of the material.

Asian PVC prices have fallen more than 50 percent since July as a global recession cut demand from toymakers and construction companies. About 60 percent of PVC goes into items such as pipes, flooring and window frames. Taiwan and China have announced economic stimulus packages that include public works, potentially reviving building projects.

“Prices are set to rebound after falling deeply,” said Jerry Lin, a Formosa Plastics spokesman. The company “will probably” raise domestic prices in January, he said.

Demand for PVC has improved “slightly,” Lin said in a telephone interview in Taipei yesterday. Taiwan’s biggest maker of the oil-derived plastic has reduced prices for four consecutive months for domestic customers.

Taiwan’s construction industry increased production by 4.85 percent from a year earlier in October, the first gain in six months, an economic ministry report showed Nov. 24.

Water Pipes

“We expect demand to increase,” China General Plastics’s Liu said by telephone yesterday. “The government stimulus packages include public works, which will mean demand to make casings for electricity cables and water pipes” that require PVC, he said.

China, Taiwan’s biggest export market, announced a 4 trillion yuan ($584 billion) stimulus package in November and loosened monetary policy after the economy grew at the slowest pace in five years in the third quarter.

Taiwan’s Cabinet approved two bills last month allowing NT$483 billion ($14.4 billion) of spending to stimulate growth after the economy shrank in the third quarter.

The plans cover NT$400 billion of spending on infrastructure and an NT$82.9 billion giveaway of shopping vouchers.

To contact the reporter on the story: Yu-huay Sun in Taipei ysun7@bloomberg.net