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Clean-air Games hit PVC prices
Last Updated(Beijing Time):2008-08-21 13:59

The price of PVC, the oil-derived plastic used in construction and some Louis Vuitton handbags, may gain 10 percent as China extends a shutdown of factories to improve air quality beyond the Beijing Olympics.

Prices will probably reach a record US$1,400 a metric ton this year because of production curbs in China's mainland, source of almost 25 percent of the world's polyvinyl chloride, Danny Ho, an analyst at Yuanta Securities Co, the largest brokerage in Taiwan, told Bloomberg News.

China has closed some PVC plants because most of its factories make the material from coal, a process that pollutes the air and consumes electricity. Reduced supplies may increase home construction costs because PVC is required at every building site as it is used to insulate electrical wires and for piping. Toys and raincoats may also cost more, according to industry officials. "PVC supply is falling," Ho said.

Many factories will stay shut after the August 8-24 Olympic Games to meet tighter pollution regulations and because of shortages of coal and power, he said.

As much as 30 percent of China's PVC capacity may currently be idled by the Olympics, stricter environmental controls and higher raw-material costs, said Zhang Guomin, vice chairman of the China Chlor-Alkali Industry Association, which represents about 100 PVC producers.

"The situation won't change much after the Olympics," Zhang said in an interview in Tianjin. Some plants will remain shut because of pollution curbs and inadequate electricity supply, he said.

"PVC prices should be on an uptrend" because of plant closures and rising costs, Zhang said.

Asian PVC prices may rise next month because of demand from manufacturers of items such as toys and plastic Christmas trees before year-end orders, said Cindy Mo, a Shanghai-based director at consultants Chemical Markets Associates Inc.

Source:Shanghai Daily 
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