FocusEurope PC sellers feel pressure from imports

17 April 2008 15:45  [Source: ICIS news]

LONDON (ICIS news)--Attempts to raise the price of polycarbonate (PC) in Europe have been thwarted by the weak dollar attracting competitively priced imports, producers and consumers said on Thursday.

 

“What we are seeing is producers putting pressure on us to take more Asian material,” a large consumer said. “In fact there is continued pressure from material coming from all over the world.”

 

“It is not the season for CDs but demand for optical grade has not been strong. In the UK figures show that demand is down by 10% because people are downloading [music] from the internet,” a consumer reported.

 

“All products can be imported so extrusion and moulding grades are also under pressure,” he added.

 

Initial attempts to raise the price of PC in Europe by 15 euro cents/kg ($0.24/kg) had failed miserably according to some sellers, who even reported price decreases at some accounts.

 

“There is big pressure on the commodity sector,” commented a seller, who added the weak US dollar was “the big issue”.

 

It most instances it seemed on a weighted average, polycarbonate contract prices in Europe had rolled over from the first quarter to the second.

 

Europe’s first-quarter PC contract settled at €2.91-3.16/kg FD (free delivered) NWE (northwest Europe) for GP (general purpose) moulding and €2.86-3.11/kg FD NWE for GP extrusion grade, according to global chemical market intelligence ICIS pricing.

 

Three large suppliers said that a rollover from the first to second quarter was a fair representation of the market, although some spoke of increases and others decreases.

Consumers also talked about contract settlements at either side of a rollover.

 

The strength of the euro and its attractiveness to US dollar-based importers was said to be impacting not only optical grade material, which had been under pressure for months now but also general purpose moulding and extrusion grades.

  

Because of the competitively priced imports from Asia and the US, a European producer said that it would consider cutting production in the third quarter if the economic situation did not change.

 

Another large producer conceded the credit crunch was putting pressure on the market, particularly for consumer-based products, such as optical media.  

 

A phenol producer said that it had heard that the PC market was under pressure from the weak US dollar.

 

 “The weak dollar is a problem for every chemical but we are running flat out and the market is still tight,” the producer added.

 

Another phenol producer said that it had not felt a slowdown in demand from the PC sector.

 

“Phenol is still short, the phenol chain has been so short and people are still trying to build stocks,” the producer added.

 

 In Asia, it was reported that attempts to increase PC prices were proving tough because of poor demand and an over-supply situation.

 

In the optical grade sector, a Hong Kong-based trader reported a 30% dip in sales compared with levels some months ago, as business performance in the downstream media storage sector was poor.

 

Plants returning from planned turnaround and new capacities due to come on stream in Asia were expected to keep the market under pressure, particularly if the dollar remained weak and downstream demand poor.

 

Taiwan’s Chimei-Asahi restarted its 75,000 tonne/year PC unit in Jen Te last week, after a 40-day turnaround. The company operates two units at the site with an annual capacity of 140,000 tonnes/year.

 

Meanwhile, Mitsubishi Gas Chemical (MGC) will expand PC capacity at its plants in Thailand and Kashima, Japan, by 10,000 tonnes/year each in the fourth quarter of 2008.

 

The company was also scheduled to begin construction of an 80,000 tonne/year PC plant in China in mid-2008.

 

Sumitomo Dow has shut its 55,000 tonne/year PC plant in Japan for a month-long turnaround and debottlenecking work. Its capacity is expected to be increased by 20,000 tonnes/year to 75,000 tonnes/year after the shutdown.

 

In Europe, Dow confirmed that it would be shutting down its 145,000 tonne/year Stade plant in

Germany from 20 April to 10 May for planned maintenance and cleaning.

 

European producers of PC include Bayer, Dow and Saudi Basic Industries Corp (SABIC).

 

PC is used in the manufacture of CDs, DVDs, glazing and sheet products and in the automotive industry. Other uses include for safety helmets and shields, housing components, household appliances, sporting goods and aircraft and missile components.

 

($1 = €0.63)

 

For more on PC visit ICIS chemical intelligence

By: Julia Meehan
+44 20 8652 3214

< previous article(ICIS Chemical Business podcast November 2, 2009)

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