FocusChinese BPA rebounds after 2-month drop

08 January 2008 04:27  [Source: ICIS news]

By Jeremiah Chan

 

SINGAPORE (ICIS news)--Bisphenol A (BPA) domestic prices in China are rebounding after a two month drop and are poised for further gains as demand picks up, traders and producers said on Tuesday.

 

Domestic BPA prices began their descent in late November last year, on a combination of weak downstream demand, oversupply caused by huge import volumes in September and October, and exacerbated by the Chinese government’s implementation of credit control measures.

 

BPA prices fell as low as yuan (CNY) 16,200/tonne ($2,228/tonne) ex-warehouse during the last week of 2007, a CNY1,300-1,400/tonne drop from levels last seen in November 2007.

 

They began to rebound after the new year’s festivities, with offers heard at CNY18,000/tonne and deals reported done at CNY16,700-16,800/tonne currently.

 

“BPA prices have already bottomed out, [with the earlier plunging prices] due to traders selling cargoes below cost in order to get cash,” a China-based trader said, adding that the recovery in buying sentiment was due partly to the conclusion of the year-end seasonal lull.

 

Stronger consumer interest from buyers who were looking to fix cargoes before the upcoming Lunar New Year holidays also underpinned domestic prices.

 

“Some end-users are stocking up on cargoes now in preparation for higher downstream demand after the upcoming Lunar New Year holidays,” a Taiwan-based producer said in Mandarin, after increasing their offers in line with the higher domestic numbers.      

     

Some market players feel that there is still room for upsides in domestic values.

 

“The domestic prices are still too low to be sustainable,” a BPA distributor based in China said in Mandarin, adding that prices would have to go back to CNY17,500-18,000/tonne ex-warehouse to be in line with current USD values of around $1,850/tonne CFR (cost and freight) China, exclusive of anti-dumping duties.

 

Either way, sellers largely breathed a huge sigh of relief  as the recovery in prices reaffirmed hopes that the gloom which the industry faced in recent weeks had finally come to an end.

 

Major Asian sellers of BPA include Nan Ya Plastics, Kumho P&B, LG Chem, and Mitsui Chemicals.

 

(1 = CNY7.27)

 

By: Jeremiah Chan
+65 6780 4359

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