FocusAsia BPA prices weaken on poor demand

22 April 2008 04:56  [Source: ICIS news]

By Jeremiah Chan

SINGAPORE (ICIS news)--Asian bisphenol-A (BPA) prices are falling and the downtrend is expected to continue into the second half of the year amid plunging demand in the key China market, market sources said on Tuesday.

BPA prices into China, the largest spot purchaser of cargoes in the region, were assessed at $1,800-1,840/tonne CFR (cost and freight) NE (northeast) Asia on Friday, a $100-110/tonne drop from prices seen a month ago, according to global chemical intelligence service, ICIS pricing.

Regional producers - realising that demand from the downstream epoxy resin and polycarbonate industries was plummeting, have considered reducing their operation rates to avoid inventories from building up.

“I’ve been trying to offer our cargoes close to our cost price, but nobody is willing to buy,” the marketing official from a Taiwan-based producer said in Mandarin.

He added that even if demand remained depressed, he would not lower his prices further due to high upstream phenol and acetone costs.

Other producers in the region share the sentiment, choosing to cut operation rates in order to stave off inventory pressure.

“We are reducing our production rates, hoping to drive prices up,” an official from one of Asia’s largest BPA spot sellers said in Mandarin, adding that a major contributing factor to the drop in prices was due to traders dumping cargoes fixed earlier at a loss.

A regional BPA trader based in China agreed, saying that several other traders “who need to generate cash are forced to accept lower buying ideas from buyers,” although end-users would procure only on a need-to basis.

Most BPA traders saddled with material were heard to be avidly offloading their cargoes, eager to avoid further losses as they anticipated further drops in prices, and lacking holding power due to the Chinese government’s tight credit policy implemented late last year in order to curb economic growth and inflation.

“Traders are offering cargoes at low prices, but I don’t think anybody is too willing to buy too much material since the outlook is poor,” the procurement manager from Kingboard Chemicals, one of China’s largest epoxy resin manufacturers said in Mandarin.

Concerns over weakening global demand due to recent controversies on the toxicity of BPA used in food container applications, as well forecasts on an impending supply overhang when scheduled new capacities come on stream in the third quarter also served to drive prices down, traders said.

Domestic fixtures in China were heard at yuan (CNY) 14,800-15,000/tonne ($2,114-2,142/tonne) ex-warehouse on Tuesday, a CNY1,200-1,300/tonne drop from a month ago.

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

($1 = CNY7.00)

For more on BPA, epoxy resins and PC, visit ICIS chemical intelligence.
By: Jeremiah Chan
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