Chemical Profile: PolyCarbonate Resin

28 February 2005 00:01  [Source: ICB Americas]

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PolyCarbonate Resin

February 28, 2005

PRODUCER CAPACITY*
Bayer, Baytown, Tex. 770
Dow, Freeport, Tex. 230
GE Plastics, Burkville, Ala. 585
GE Plastics, Mount Vernon, Ind. 540
Total 2,125

*Millions of pounds per year of polycarbonate (PC) resins. Unblended resin accounts for more than 80 percent of PC demand. The balance consists of blends or alloys with other resins.

It has been reported that last year Bayer completed expansions at Baytown, Tex., that increased annual capacity from 400 million pounds to 770 million pounds.

In late 2002, GE Plastics expanded annual PC resin capacity at its Burkville, Ala., site by 155 million pounds, bringing total annual capacity to 585 million pounds.   Profile last published in 1/21/02; this revision 2/28/05

DEMAND

2003: 1,011 million pounds; 2004: 1,065 million pounds; 2008: 1,255 million pounds, projected. Demand equals production plus imports (2003: 163 million pounds; 2004: 171 million pounds) less exports (2003: 742 million pounds; 2004: 856 million pounds).

PRICE

Historical (1999-2004): High, $1.94 per pound, contract, Gulf, general purpose molding resin, pellets, t.l., frt. alld.; low, $1.40, same basis. Current: $1.75 to $1.99, same basis. Current spot pricing is $1.72, same basis.

USES

Optical media, 23 percent; glazing and sheet, 21 percent; automotive, 15 percent; medical, 9 percent; computers and business machines, 7 percent; recreation and safety, 7 percent; appliances, 5 percent; packaging, 3 percent; miscellaneous, including electrical, lighting and film uses, 10 percent.

GROWTH

Historical (1999-2004): 1.2 percent per year; Future: 4.2 percent per year through 2008.

STRENGTH

Between 1999 and 2004, demand in the US for PC resin increased at an average annual rate of only 1.2 percent, the result of demand constriction caused by the recession of 2000–2001. By comparison, PC exports during the same period increased from 608 million pounds to 856 million pounds—a volume equal to 80 percent of domestic demand. Since then, the markets have fully recovered, and PC growth is back on track.

PC resins consumed in automotive and transportation applications accounted for 15 percent of the total demand. The resins, as well as alloys of PC and other thermoplastics (e.g. PC/ABS, PC/polyester), are used in place of traditional materials such as metal and glass in automotive components, which utilize PC’s impact resistance, heat-distortion properties, weather resistance and stiffness. This sector is expected to grow at 5 percent per year over the forecast period.

Optical media, including audio compact discs (CDs), CD-ROMs, recordable CDs and digital versatile disks (DVDs) now account for 23 percent of the PC market, its largest segment. PC consumption in the optical media sector will provide the highest annual demand growth over the next several years, about 9 percent.

WEAKNESS

In 2004 the PC market became extremely tight due to limited supply of bisphenol-A, which itself was limited due to a shortage of phenol feedstock. Phenol was short because of maintenance turnarounds and production glitches, as well as a surge in demand for all its major derivatives, including bisphenol-A.

Although producers have been able to raise prices in the short market, margins are still slim owing to the run-up in raw material, energy and transportation costs. For instance, benzene costs tripled from their 10-year average last year. Benzene is the starting material for the cumene>phenol>bisphenol-A>PC chain.

There is also intense interpolymer competition in the automotive, electronics and construction industries, which account for a sizable chunk of PC’s overall demand. Polymethyl methacrylate (PMMA) in particular, has been targeted for use in DVD applications by its producers. Low birefringence, high light transmission, lower viscosity, and lower cost are touted advantages of PMMA.

OUTLOOK

Although high energy and raw material costs have crimped margins and forced producers to raise prices, the PC industry is enjoying robust domestic and global growth, assisted in part by a greater run-up in the cost of competing materials such as steel. Producers expect demand to improve again next year, and anticipate that profitability should rebound once energy and feedstock costs ease.

Optical media applications will continue to do exceptionally well, but most of this activity will take place in Asia. Coupled to this is increasing overseas PC manufacturing capacity, particularly in Asia. The new capacity there will eventually displace PC exports from the US, which have grown continuously in recent years.

All things considered, domestic aggregate growth of the PC sector is expected to be 4.2 percent for the forecast period.

­—Mark Kirschner





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