FocusAsian PC set to fall on sluggish demand, high inventory

07 April 2011 09:20  [Source: ICIS news]

By Liu Xin

SINGAPORE (ICIS)--Asian polycarbonate (PC) prices look set to weaken, suppressed by tepid derivative demand and the persistently low domestic prices in the key China market, despite attempts by producers to raise prices and boost margins, market sources said on Thursday.

Spot prices were stagnant at $3,250-3,350/tonne (€2,275-2,345/tonne) CIF (cost, insurance and freight) Hong Kong for GP-moulding grade and at $3,050-3,150/tonne CIF Hong Kong for optical grade, according to ICIS data. (please see graph below)

“We were earlier targeting moderate price increase of $30-50/tonne in April, but it is very difficult to implement any price increase and we are trying to maintain our prices,” said a regional producer.

Downstream demand in China was capped by tightening credit and reduced export orders for finished goods. Traders showed limited buying interest for imported cargoes as they were saddled with ample inventories.

“PC prices may have peaked following their recent hikes,” said a trader. “We are expecting some downward correction given ample supply and soft demand,” he added.

Spot PC prices had gained $150-200/tonne since mid-February, buoyed by rising feedstock bisphenol A (BPA) values and the expectations of tighter supply and firm raw material costs following the massive earthquake that hit Japan on 11 March.

Mitsubishi Engineering Plastics shut its 110,000 tonne/year PC facility in Kashima, but is keeping its 60,000 tonne/year PC unit in Kurosaki running after the earthquake, sources said.

Idemitsu Kosan’s 47,000 tonne/year PC plant in Chiba was taken off line in the aftermath of the quake, while Teijin Polycarbonate is running its 130,000 tonne/year unit in Matsuyama at full rates, sources said.

The power restrictions in Japan after the quake had curtailed local production and supply, but this had little impact on PC prices given lukewarm derivative demand in the key China market and an anticipated slump in domestic demand in Japan, sources said.

Meanwhile, the recent start-up of a Middle East-based 65,000 tonne/year optical-grade PC plant was expected to exert some downward pressure on spot values when cargoes arrive in Asia in end-April/May. Furthermore, a second 65,000 tonne/year unit was scheduled to start up at the same site in April, sources said.

“PC prices look set to fall in April, but prevailing high BPA costs and lean margins would prevent any drastic declines,” said a regional trader.

Asian BPA spot prices were steady at $2,480-2,520/tonne CFR NE Asia on 25 March following the recent rally on the back of tight supply, according to ICIS data.

The spread between BPA and PC had narrowed to $600-800/tonnes, which was considered unhealthy by industry players. They prefer the spread to be over $800/tonne.

PC is a type of high specification engineering plastic, suitable for moulding and with a high resistance. Typical applications include automobiles, CDs and DVDs, electronic casings, returnable milk bottles, lighting and greenhouses.

($1 = €0.70)

Please visit the complete ICIS plants and projects database
For more information on PC, visit ICIS chemical intelligence
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Liu Xin
+65 6780 4359

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