15 July 2011 06:38 [Source: ICIS news]
By Liu Xin
SHANGHAI (ICIS)--Asian polycarbonate (PC) prices may continue falling for the rest of the year because of sluggish demand and plummeting values of feedstock bisphenol A (BPA), industry sources said on Friday.
Spot PC prices have shed $200-300/tonne (€142-213/tonne) since early April to $2,950-3,050/tonne CIF (cost, insurance and freight) ?xml:namespace>
In the key
Export orders also weakened because of a stronger Chinese currency, sources said.
Suppliers are pinning their hopes on a demand recovery in September, when orders for the year-end holidays flow in. However, it remains to be seen if any demand recovery could materialise given a gloomy economic outlook, industry players said.
“The [PC price] downtrend will continue in August, and even in the fourth quarter, given the sharp falls in feedstock BPA numbers,” said a northeast Asian trader.
BPA spot prices plunged $300/tonne or 13% over the past two weeks to settle at $2,000-2,030/tonne CFR (cost and freight)
This has further dampened the appetite of PC buyers, which are sidelined because of falling prices.
“Price declines are inevitable next moth,” said a PC maker, adding that margins remain under pressure despite falling feedstock costs.
Margins have been squeezed in the first half of the year, particularly for optical grade PC, because of ample supply and stiff price competition, market sources said.
The spread between BPA and PC had narrowed to $600-800/tonnes, which was considered unhealthy by industry players. A preferred spread should be over $800/tonne.
Although PC suppliers have yet to recoup eroded margins, they are expected to cut prices further in the wake of prevailing weak market conditions.
Regional supply is expected to increase soon, when operations at Formosa Idemitsu Petrochemical Corp’s (FIPC) PC plant in Mailiao fully resumes this month and with fresh cargoes expected from Saudi Basic Industries Corp’s (SABIC) 260,000 tonne/year PC plant at Al Jubail, Saudi Arabia.
FIPC’s three production lines in
“The market is bearish. Buyers prefer to keep inventory at minimum level as supply is long while demand is weak,” a China-based trader said.
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 = €0.71)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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