Occidental sees lingering uncertainty for PVC, caustic soda demand: CFO

Occidental Petroleum's chemical division sees lingering uncertainty in polyvinyl chloride and caustic soda demand in the first half of 2023, CEO Robert Peterson said Feb. 28.

PVC producer OxyChem saw 2022 US PVC export demand jump 46% while domestic PVC demand fell nearly 7%, both from 2021, Peterson said during the company's fourth-quarter 2022 earnings call.

He said many buyers' inventories were low ahead of the peak summer construction season, while exports were expected to trend upward in 2023.

Us PVC exports rose sharply in the final months of 2022 as high-interest rates and high inflation siphoned domestic demand for the construction staple used to make pipes, window frames, vinyl siding, and other products.

The US exported 2.48 million mt of PVC in 2022, up 28.7% from 1.93 million mt in 2021, according to US International Trade Commission data.

While the company sees pent-up demand amid low inventories, Peterson said rising interest rates "may not peak as early or begin to subside as quickly as anticipated" in 2023 with more interest rate hikes expected in the coming months, Peterson said.

In addition, domestic PVC demand in China has not risen notably since pandemic-related restrictions were lifted in late 2022, he said.

US export PVC was last assessed at $835/mt FAS Houston Feb. 22, up nearly 27.5% since early December, but down 52% from the 2022 high of $1,755/mt FAS in April, Platts data showed.

Peterson also said caustic soda demand was seen as soft amid China's slow rebound from coronavirus restrictions and oversupply in Europe.

Caustic soda, a byproduct of chlorine production, is a key feedstock for the alumina and pulp and paper industries. Chlorine is the first link in the PVC production chain.

US export caustic soda prices reached an all-time high of $1,055/mt FOB USG in late October on European demand after sharp reductions in chlor-alkali rates left inventories depleted. Market sources have said, however, European buyers overdid efforts to build up inventories given soft caustic soda demand in the region.

Peterson said the company would get a clearer view of 2023 caustic soda demand by mid-2023 as European inventories slowly unwind and China demand gradually ticks up.

US spot export caustic soda prices were last assessed at $625/mt FOB USG Feb. 21, down 40.7% from an all-time high, Platts data showed.