PVC Prices Fall, Along with Production Cost of Artificial Christmas Trees

- December 2, 2013 2:43 PM
Categories: Commodities, Guest Post | Tags: , ,

Spend Matters welcomes a guest post from Samantha Miles of Mintec.

Every Christmas, many families have the Christmas tree debate – real or artificial? According to the National Christmas Tree Association, it’s a close run race. Last year Americans spent $790 million on artificial trees and $1.01 billion on real ones.

The traditional Christmas tree is an evergreen, and it is thought that the idea of setting the tree indoors originated in the 17th century. However, more recently there has been a trend for artificial trees, the earliest of which were pyramid shaped, made from wood, and developed in Germany. These would have been modestly decorated with candles for light.

Since then, technology and materials science have improved. Your standard modern artificial tree is most probably made in China from Polyvinyl Chloride (PVC). PVC is the plastic of choice for a number of factors, as it is durable, recyclable, cheap to manufacture, and most importantly, fire-resistant. In general PVC accounts for around 20% of all plastics used globally, and China still continues to be the major player and largest exporter, satisfying 35% of global demand. Europe and North America are each responsible for a further 15%.

PVC prices

To construct a basic tree you need PVC, steel, and some cartonboard/testliner for the packaging.

As it stands, Chinese PVC prices have been falling due to good stocks and the drop in demand as building construction slows in the Northern hemisphere during the winter months. Steel prices have seen some minor increases this year, but prices are still lower year-on-year, for a similar reason. Paper packaging prices have been falling, with cartonboard down 7% and testliner down 9% year-on-year. This is mainly the result of current high stocks in China. China tends to drive the paper market due to its high demand for paper packaging; however, the high stocks have lowered demand and allowed prices to fall.

So understanding what is happening to raw materials may influence that question of buying a real or artificial Christmas tree this year.

There is a case for buying a real tree. It supports the rural economy by providing jobs and the supply is sustainable. You may also be tempted by the fresh nostalgic fragrance that can transform a room and add to the Christmas feeling. But maybe you can’t stand the needles shedding everywhere, the constant watering, or the strenuous disposal of a real Christmas tree. If that’s you, then with the lower production price of artificial Christmas trees, this year may be one of the best to invest in the artificial replica version, with maybe one or two LEDBeam 100s!

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