Rising feedstock costs to drive up price of European PC

21 March 2012 18:01  [Source: ICIS news]

LONDON (ICIS)--European polycarbonate (PC) buyers are bracing themselves for significant price increases in the second quarter of the year because of rising feedstock costs, sources said on Wednesday.

“I expect second-quarter prices will go up by at least €300/tonne but maybe even €400/tonne if the market becomes tight because of maintenances in Europe,” a buyer said.

Most PC producers are aiming to raise second-quarter contract prices by €0.40–0.50/kg ($0.52–0.65/kg) because of higher raw material costs.

US-based plastics, latex and rubber producer Styron is targeting a €0.25/kg price increase for all European Calibre and Emerge PC compounds and blends, effective as of 1 April or as existing contract terms allow, the producer said in a statement in early March.

“This price increase comes as a result of the further escalation of key raw material costs associated with the manufacturing of [PC],” the statement said.

This was the second announcement Styron has made after a similar €0.25/kg price-hike notice in January.

Two other PC makers are targeting similar price increases. One of them, Saudi-based chemicals, fertilizers and plastics producer SABIC, has announced a €0.15/kg rise on top of a previous €0.19/kg increase because of higher-than-expected feedstock costs.

Producers said they viewed the market as bullish with sales improving every month.

They said the market was surprisingly good, which was unexpected after the sluggishness experienced in the last quarter of 2011.

It was unclear whether demand has increased because buyers are filling up inventories ahead of the announced price increases or whether it is because of underlying good demand from the construction and automotive industries.

Some PC makers said demand from these two sectors was good, although recently released statistics data showed contraction in European new car registrations and construction output.

Eurozone construction output fell by 0.8% in January 2012 compared with the previous month, and dropped by 4.1% in the 27-member EU, statistics office Eurostat said on Monday.

New registrations for passenger cars in the 27-member EU fell by 9.7% year on year in February, with Germany the only major market to avoid a drop.

In light of this, PC buyers do not expect a major upturn in demand and describe the market as less bullish than producers do.

One consumer said it expected PC demand would drop by up to 7% compared with the same period last year.

“With all the additional capacity coming online in Asia and the Middle East, I am not worried about tightness in the market,” a second buyer said.

Consumers described the European market as balanced. Two said it was on the long side and there were no supply problems.

In addition, buyers said upstream tightness in phenol and bisphenol A (BPA) supply did not seem to be affecting PC supply and it was easy to obtain material at short notice.

But this may change in April and May when one major PC producer in Europe will be shutting down for planned maintenance.

Styron will shut its 145,000 tonne/year PC plant in Stade, Germany for an unspecified period.

A source at the company said everything is going according to plan and it is stocking up for the shutdown.

Another producer is expected to shut down in April but the dates and the length of the shutdown had not been confirmed by the company at the time of writing.

Second-quarter contract negotiations are ongoing and are expected to be finalised by the end of next week.

First quarter moulding grade PC is €2.60–2.70/kg and extrusion grade PC is €2.50–2.65/kg

($1 = €0.76)

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By: Janos Gal
+44 208 652 3214

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