FocusBPA under pressure as demand slumps

19 October 2007 09:10  [Source: ICIS news]

SINGAPORE (ICIS news)--Bisphenol-A (BPA) spot prices are under pressure due to a drastic drop in demand from epoxy resin producers in China, traders, buyers and producers said on Friday.


The sudden plunge in demand came on the back of a hike in epichlorohydrin (ECH) domestic prices, which have surged yuan (CNY) 1,500/tonne ($200/tonne) to CNY18,000-18,500/tonne DEL (delivered) east China in the past two weeks due to limited spot availability, according to global chemical intelligence service ICIS pricing.


ECH is used together with co-feedstock BPA in the manufacture of epoxy resins. The surge in ECH prices have hit epoxy resin producers, who quickly retreated to the sidelines as buying sentiment for BPA weakened due to the sudden increase in production costs.


“ECH prices have risen too quickly for epoxy resin makers to accept and that has sent the industry into a state of shock,” a trader based in Shanghai said in Mandarin.


Lacklustre demand from the downstream polycarbonate (PC) sector also exacerbated the situation, as the consumption of BPA from PC makers has fallen in recent months. Although PC makers were hopeful sales would pick up ahead of the upcoming year-end holiday season, traders noted them market still had plenty of room for improvement.


“PC makers are suffering. In order for PC to be profitable, there should be a spread of $900-1,000/tonne (between BPA and PC),” a Japanese trader said, noting that the current spread was only about $700-800/tonne.


A Taiwanese producer added production cutbacks at several PC plants had resulted in surplus BPA ending up in the spot market, which exerted further downward pressure on prices.


Epoxy resin producers were also bearish about the BPA price outlook.


“We expect BPA prices to drop even further, as current buying sentiment is extremely weak, and phenol prices have fallen significantly as well,” the purchasing manager of an epoxy resin producer said in Mandarin.


Feedstock phenol prices slumped to a new four-month low of $1,550-1,600/tonne CFR (cost and freight) CMP (China Main Port) last week, and some buyers predicted further downside for BPA prices as producers were seen to be maintaining unnecessarily high margins.


BPA spot prices were also assessed down $10-30/tonne at $1,900-1,970/tonne CFR northeast (NE) Asia during the same period, according to ICIS pricing.


Key BPA majors in Asia include Nan Ya Plastics, Kumho P&B, LG Petrochemicals, Nippon Steel and Mitsubishi Chemicals.


($1 = CNY7.51)


By: Jeremiah Chan
+65 6780 4359

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