15 August 2011 11:13 [Source: ICIS news]
LONDON (ICIS)--European bisphenol A (BPA) market players are forecasting shortages and tightness in the market from September because of upstream phenol supply problems caused by a force majeure at INEOS Phenol, sources said on Monday.
Another factor was that Slovakian company Slovnaft recently stopped production of feedstock phenol, exacerbating the shortage in Europe, sources said.
One BPA producer said that some buyers may find themselves in a difficult situation in September when INEOS Phenol shuts for planned maintenance for four weeks.
However, a BPA buyer said that the force majeure has not had any impact on the market and it will not change the situation in September. The buyer added that plenty of material is available despite the INEOS outage and additional product can be ordered from Asia and Russia if necessary.
European August BPA contracts rolled over from July. Although demand had fallen and supply conditions had improved, the price of BPA did not fall because feedstock costs increased.
"The market is stable right now because demand is weak during August, but it will definitely change in September when stocks are replenished and the market picks up," said a major polycarbonate (PC) European producer.
"People need to plan ahead, otherwise they might find it hard to get product at short notice," the PC producer added.
Some PC market players have already begun negotiations on prices and quantities for the fourth quarter. This is unusual because contract negotiations normally start at the end of September or at the beginning of October, said the PC producer.
The producer said that this is because its customers want to avoid potential price increases and make sure they will get enough material in the fourth quarter. The producer added that it expects the price of PC feedstock BPA will increase because of the phenol supply problems.
Sentiment is different in the epoxy resins market. A number of market players said that there is oversupply in the market and demand is weak. This is because demand has fallen from the downstream construction and electronics industries. In addition, the automotive industry has been affected by seasonal shutdowns in southern Europe.
"Issues with spare part supply from Japan have also contributed to the drop in demand from the electronics sector, as a lot of chip-making factories that exported to Europe were destroyed by the earthquake and tsunami in March," said one trader.
European August epoxy resin contracts settled down by €100–150/tonne from July. Liquid epoxy resin (LER) contracts settled down by €100–150/tonne at €2,750–2,850/tonne FD (free delivered) NWE (northwest Europe), while solid epoxy resins (SER) were down by €100/tonne ($143/tonne) at €2,850–3,000/tonne FD NWE. Demand for epoxy resins is expected to pick up from September and one trader said that it has already seen additional orders for next month. This may lead to price increases.
"I expect a price increase from September because of increasing feedstock costs," said an epoxy resins producer.
There has been a lot of talk about the financial crisis in Europe. Many fear that it will have a negative impact on the industry. One producer said that because most downstream products are linked to GDP, there will be a negative impact on the market if economies struggle.
However, the market remains quiet for the time being as most players are on summer holidays.
($1 = €0.70)
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