US polyvinyl chloride (PVC) participants are downgrading initial demand estimates from nominal growth to more stable expectations in the coming months because of downbeat housing variables.
Many US PVC participants throughout March and April said early signs from housing data and customer sentiment did not point to a robust housing construction season in the coming months. PVC buyers have been hesitant to build inventory under such conditions, further slowing consumption because many are unsure when or if end-user demand will support initial purchases.
Privately-owned housing permits were at a seasonally-adjusted annual rate of 1.482mn units in March, according to data from the US Census Bureau and the Department for Housing and Urban Development (HUD). While March permits rose by nearly 2pc from February, they fell by less than 1pc from year-ago levels.
Single family permits stood at 978,000 units, down by 2pc from the prior month and lower by less than 1pc from the same time last year.
Housing starts in March were at a seasonally-adjusted annual rate of 1.324mn units, about 11pc below February rates but nearly 2pc higher than a year earlier. Single-family starts declined by about 14pc to a 940,000 unit rate from the prior month.
The latest builder sentiment survey for April maintained a cautious view for the single-family homes market, reversing nominally weaker sentiment from March, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). Sentiment, though, remains well below the confidence seen at the start of the year, underpinning a weakening market.
PVC participants are increasingly concerned that current and future tariffs imposed by President Donald Trump on critical trade partners will re-trigger inflation and thwart any future interest rate cuts by the Federal Reserve. Lower interest rates are largely regarded by PVC players as a bullish demand variable, especially in the housing sector.
Federal Reserve chairman Jerome Powell did not ease market concerns last week, saying tariffs are likely to contribute to "higher inflation and slower growth" — or stagflation — and added markets were struggling "with a lot of uncertainty."
Powell added that tariffs could challenge the Federal Reserve's dual mandate of maintaining price stability while fostering maximum job growth, leaving policymakers to wait for greater clarity on economic impacts before making any adjustments to interest rates.
