FocusChina BPA prices see steep drop

04 November 2008 09:48  [Source: ICIS news]

By Jeremiah Chan

SINGAPORE (ICIS news)--Bisphenol-A (BPA) prices in China had their steepest seven-day drop last week, falling by 25-32% due to excess supply, poor demand and crashing domestic prices, market sources said on Tuesday.

BPA prices were assessed at $950-1,050/tonne CFR (cost and freight) NE (northeast) Asia on 31 October on a confirmed deal reported at the lower-end of the price range, according to global chemical markets intelligence service ICIS pricing.

The reported deal represented a startling plunge of $350-410/tonne from previous weeks’ values of $1,360-1,400/tonne CFR NE Asia, and a 40-45% slump over four weeks of consecutive price decreases since early-October.

The 216-tonne bonded-warehouse BPA parcel was reported to have been sold to an epoxy resins manufacturer in eastern China at $950/tonne on 31 October.

“Now, I will not pay anything above $800/tonne CFR China. There’s still plenty of room for prices to fall further, if nobody’s willing to sell me at this price this week, then I will simply choose to wait,” the procurement manager of the epoxy resins plant told ICIS news in Mandarin.

Some regional sellers pointed out that such price movements were unrealistically rapid, especially in light of the high costs of raw materials procured earlier.

Several regional producers have pointed out that they would rather cut production rates in an attempt to hold prices, rather than offload cargoes at current market levels, which were below their cash costs.

On the other hand, the poor BPA demand/supply fundamentals have accelerated the downward pressure on prices.

BPA demand has been lacklustre in recent months following the reduced operation rates at several downstream epoxy resin plants in China, which has exacerbated by lower consumption due to the current global economic downturn.

Reduced purchasing power from importers due to difficulties in obtaining letters of credit (LCs) also kept fresh imports at a minimum.

On the supply front, the expansion of Kumho P&B and LG Chem’s BPA plants in South Korea this year has also resulted in surplus production in the region.

The impending start-up of Shanghai Sinopec Mitsui Chemicals’ (SSMC) 120,000 tonne/year plant in China would also drag down prices, market sources said.

Plummeting Chinese domestic values which crashed by yuan (CNY) 1,600-2,000/tonne ($234-292/tonne) in a single week to around CNY8,200-8,300/tonne ex-warehouse on 31 October were also a key factor behind the plunging US denominated prices, market sources said.

Traders saddled with excess inventories were dumping cargoes in an effort to curb further losses, market sources added.

BPA is a key monomer used in epoxy resins and polycarbonate manufacturing, and major producers in the region include Nan Ya Plastics, LG Chem, Mitsui Chemicals, Kumho P&B and Chang Chun Plastics.


For more on BPA visit ICIS chemical intelligence
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By: Jeremiah Chan
+65 6780 4359

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