China phenol, acetone, BPA prices fall more than 30% in two months

30 November 2011 08:17  [Source: ICIS news]

SINGAPORE (ICIS)--China’s domestic prices of phenol, acetone and bisphenol A (BPA) have declined in November from mid-September because of oversupply and poor demand, industry sources said on Wednesday.

Downstream producers are reluctant to purchase cargoes because of cash strains and weak demand from end-users, causing several importers to continue lowering their prices to increase their margins, the sources added.

Phenol prices fell to yuan (CNY) 8,500-8,600/tonne ($1,332-1,348/tonne) ex-tank east China on 25 November, a 35% drop from CNY13,200/tonne in mid-September, according to data from Chemease, an ICIS service in China.

The phenol prices continued to fall because buyers halted their purchasing activities. However, the prices rebounded briefly at the end of October as buyers purchased additional volumes at the lower prices, an industry source said.

Acetone prices fell to CNY7,000/tonne ex-tank east China, a 30-32% drop from CNY10,000-10,300/tonne ex-tank in the second half of September, according to the data.

China’s acetone prices continued to decline as downstream producers faced mounting costs, tightened cash flow and poor end-user demand.

The buying interest for acetone has been weak because some downstream producers were forced to shut or lower the production at their plants, according to a trader based in east China.

Some sellers sold their stock at lower prices to maintain their margins and minimise their losses, leading major traders to lower their prices, a second trader based in east China said.

BPA prices fell by 38% from CNY16,900-17,000/tonne ex-tank in mid-September to CNY10,500-10,600/tonne ex-tank east China on 25 November, the Chemease data showed.

BPA imports to China in August and September reached record highs of more than 60,000 tonnes. This, along with a weak economic environment and softening feedstock prices, caused market sentiment to turn bearish. As a result, the prices continued to fall as traders rushed to lower their inventory levels, a third east China-based trader said.

Most market players are adopting a cautious stance towards the outlook of the phenol, acetone and BPA markets as demand is unlikely to pick up during the traditional year-end lull period, a fourth east China-based trader said.

Both sellers and buyers need to recover their margins in the coming weeks as the European debt crisis and lukewarm overseas demand is weakening the sentiment for all three markets, an industry source said.

($1 = CNY6.38)   

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By: Jenny Yi



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