U.S. producers of PVC and epoxy anticipate demand pull from Bipartisan Infrastructure Deal

The Bipartisan Infrastructure Deal passed by Congress in Nov. 2021 may soon contribute to PVC tubes demand for water management or for the epoxy in coatings for structures like bridges, leading to increased business for companies like Shintec, Westlake, or Formosa in polyvinyl chrloride (PVC) and also DuPont, Hexion and Olin, with epoxy.

Opened in 1937, the Golden Gate was both the world´s longest and the tallest suspension bridge until 1964, and 1998. The Golden Gate says that in 1990 its coatings changed from vinyl to an acrylic emulsion to meet VOC standards. Image courtesy of Pixabay

The legislation aims to “rebuild America’s roads, bridges and rails, and expand access to clean drinking water,” among other things, according to information available in early September in the website of The White House. Also called the Infrastructure Investment and Jobs Act, passed on Nov. 8, 2021, the legislation was also designed with the intention to create jobs. 

“Up to 10 million American households and 400,000 schools and child care centers lack safe drinking water,” The White House website said. About $55 billion have been targeted just to expand access to clean drinking water, it added.

The legislation also included plans to “invest $110 billion in additional funding to repair our roads and bridges” that would demand chemicals like for example those that go into coatings.

“So as those funds are getting sent to the municipalities and governments, we'll see more demand for both PVC and as well as for epoxy,” said CEO Albert Chao in early August 2023,  while discussing Westlake Corp.´s April-June earnings as well as sharing the Houston-based company´s demand outlook, according to the company website.

Current global demand for PVC is weak

Demand for both PVC and epoxies is currently weighted down globally, in large part, by a slower-than-hoped-for recovery of China that isn´t helping demand for polyvinyl chloride (PVC), Chao said.

PVC, often described as a “high-strength  thermoplastic”and most commonly recognized in kitchens or bathroom water tubes, can also be seen used a bit more subtly in home sidings, roofs, doors, or window frames, and also curtains. But it also goes into vehicle parts, or cable insulation.

Epoxy, on the other hand, is used for wind turbine blades, to help keep electric vehicles (EVs) become light in weight, and in aerospace, besides its applications including in coatings.

The epoxy and PVC producers

According to Verified Market Research, the U.S. biggest epoxies manufacturers include Hexion, based in Ohio; Olin, based in Missouri; and the Delaware-based DuPont.

Shin-Etsu Chemical is Japan´s biggest chemical company, and is also one of the biggest in the world. The company´s U.S. subsidiary, Shintech, based in Louisiana, covers 35% of the U.S. market demand and is also the world’s biggest PVC producer.  Westlake Corp. is only second to Shintech, both in the U.S. and globally, in size.

Shintech started operations in 1974 with PVC production in Freeport, Texas. It then bought additional property in Addis and in Plaquemine, both in Louisiana.

As for Westlake, the Houston-based company has 16,000 employees and operates globally. Its website lists production and commercial facilities for its multiple PVC-related products across North America, including in Canada and Mexico.

Road works ahead

The U.S. legislation contemplates $110 billion in additional funding for road and bridge repair, with plans to “rebuild the most economically significant bridges in the country as well as thousands of smaller bridges.”

The legislation aims for “the largest investment in public transit in U.S. history” and described the current system as outdated with over 24,000 buses, 5,000 rail cars, 200 stations, and thousands of miles of track, signals, and power systems it said were in need of replacement.

The legislation includes $39 billion of new investment to modernize transit, according to the U.S. White House website. It aims to invest $66 billion “in additional rail funding to eliminate the Amtrak maintenance backlog, modernize the Northeast Corridor, and bring world-class rail service to areas outside the northeast and mid-Atlantic.”

Some other petrochemicals that are also frequently used in vehicles include polyurethane, for all types of seat and other cushioning, or SBR (styrene butadiene rubber) for all vehicle tires, including airplane and buses. Dozens of other chemicals, from flame retardants on door handles to engine antifreeze, can also used in transportation vehicles.

Amtrak is a federally chartered corporation for rail transportation, with the federal government as majority stockholder that is operated as a for-profit company, rather than a public authority, according to the website of Amtrak.

There are also plans to build a national network of 500,000 EV chargers as part of many other energy and climate-related efforts. EVs require even more plastic components than conventional vehicles due to the need to reduce weight.

Westlake products include vinyls, chlor-alkali and derivatives, chloro-vinyls, olefins, polyethylene and epoxy. Its finished goods portfolio for home building includes sidings, roofs, trim and moulding, as well as pipes and fittings.

Other company businesses include Dimex “one of the largest recyclers of industrial PVC and other plastic materials,” according to Westlake, which reported $3.3 billion in sales revenue for the second quarter.

Chao said that company officials remain positive on a perceived demand outlook “driven by increased consumer activity and demand for clean, fresh water, electrification and renewable energy benefits from the Infrastructure Investment Act and Inflation Reduction Act (…)”

Big-diameter pipes to see demand

Westlake´s CFO, Steve Bender, said that among products that may be in high demand with the U.S. infrastructure spending, once the funds reach the execution stages, are big-diameter pipes.

“(…)That is a larger diameter pipe that is well suited for the infrastructure bill that we see that's $55 billion,” Bender said when asked a question during the call in reference to the planned U.S. infrastructure spending and possible effect on demand.

“So we think we're very well positioned to be able to address those needs for counties and municipalities,” he added.

The company´s CEO Albert Chao said that “our epoxy business is a bigger supplier of coatings for any infrastructure bridges and structures.”

Westlake announced in April 2022 that it was adding construction, lightweight materials businesses to its portfolio.

By Renzo Pipoli