13 February 2009 05:43 [Source: ICIS news]
By Jeremiah Chan
SINGAPORE (ICIS news)--Asian bisphenol A (BPA) spot prices have been on the rise, spurred by higher benzene and propylene prices, improving demand amid tight supply conditions and an increase in speculative purchasing activities due to easier availability of credit lines in China, market sources said on Friday.
Offers were up by around $50-70/tonne (€39-55/tonne) to $900/tonne CFR (cost and freight) China Main Port (CMP) this week, as producers continued to press for higher margins.
“We need to get at least a $500/tonne spread over benzene prices in order to just break even,” said one Korean manufacturer, adding that most BPA producers had been running in the red due to tightened margins as a result of a slowdown in demand amid the global economic slump.
Feedstock benzene prices were assessed at $440-450/tonne FOB (free on board) ?xml:namespace>
Similarly, propylene assessments were up almost 35% to $650-700/tonne CFR NE Asia from last December.
Despite the rise in feedstock prices, BPA prices had decreased by 11% over the same period of time. Prices were assessed at $760-800/tonne
This led to negative margins in BPA manufacturing, resulting in slashed operating rates at most regional BPA production facilities in a bid to prevent further losses.
The lower inventory levels, coupled with higher operation rates in the downstream epoxy resin industry, sparked a flurry of buying activity in recent weeks.
One producer based in
A source from another major Taiwanese seller, Nan Ya Plastics, also pointed out that the company faces some slight delays in ramping up operation rates due to technical reasons.
The recent injection of liquidity into the spot market through a more relaxed credit approval process by Chinese banks had also boosted buying interest, said an industry source.
“After the lunar new year (holidays), the banks are offering cheap and readily available letters of credit (LCs). The traders who are out to make a quick buck will buy commodities which have not risen in recent months, and they can see there is considerable potential upside in BPA prices,” he added in Mandarin.
The reduced supply, coupled with healthier post-Lunar New Year demand as buyers and traders restocked their inventories, has been pushing BPA prices further north.
One buyer from an epoxy resins plant located at the
“Crude oil has fallen to $33/bbl yesterday, so I think raw material like propylene is really overpriced, and could come down in the near future,” he said in Mandarin, adding that he would only procure material on a back-to-back basis in the hope that prices would correct sharply downwards in subsequent weeks.
($1 = €0.78)
Liu Xin contributed to the article
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