Asia Chemical Profile: Polycarbonate

28 May 2012 00:00  [Source: ICB]

Polycarbonate (PC) resins have major markets in the electrical/electronic sectors, in glazing and sheet products, and in the automotive industry. Other uses for PC resins include safety helmets, shields, housing components, household appliances, water cooler bottles, lighting fixtures, sporting goods and aircraft and missile components.



PC demand growth is driven by key applications such as automotive, construction, IT and consumer electronics. Producers have been expanding their capacities in China and the Middle East to tap into the growing market.

Despite a slowdown in the general global economy, global growth is seen at 6-7%/year going forward, and more than 10%/year in China, according to global PC producer Bayer MaterialScience (BMS).

Global economic uncertainty, as well as competition from Middle East supplies and any capacity expansion in that region are major challenges facing PC producers.

The Asia PC market is amply supplied amid weaker-than-expected derivative demand. The weak economic conditions in the US and the eurozone continue to dampen the consumption of Asia-made goods. The slowdown in China's economy this year also erased a portion of the demand for PC.

However, per capita consumption of PC in Asia and China is still low. PC's increasing use in the lightweight mobility sector and in the lighting industry will support demand growth in China. China is a net importer of the material, and new capacity planned there will help the country cut its PC imports.

Asia PC prices for optical-grade and general purpose (GP) molding grade remained on a steady upward trend from mid-February 2012 to early May 2012, mainly driven by firm upstream phenol and bisphenol A (BPA) prices.

Optical grade PC traded at $2,400-2,630/tonne CIF (cost, insurance and freight) Hong Kong and Taiwan, while GP molding grade were traded at $2,700-2,900/tonne CIF Hong Kong in mid-May, as assessed by ICIS.

Buying sentiment for GP molding grade PC was buoyant in the major China market in the first quarter of the year as traders were keen to fill up stocks in light of rising feedstock costs. End-users, however, continued to buy on an as-needed basis as derivative demand showed limited signs of improvement amid an uncertain global economic outlook.

Buying sentiment was cautious amid concerns of a slowing Chinese economy. The Chinese government has cut its GDP growth target this year to 7.5%, down from the 8% target that had been kept for seven years.

Trading activity has slowed down since early May as buyers retreated to the sidelines in view of downturn in crude oil prices and plummeting upstream BPA and phenol prices.

PC took off commercially in the late 1950s when Bayer and US-based GE separately commercialized processes to make it from BPA. These early productions were based on the reaction of phosgene with phenol to diphenyl carbonate (DPC), which was reacted with BPA. Tougher environmental restrictions led to development of nonphosgene routes.

While demand from the optical media sector, such as CDs and DVDs, is declining, global PC demand is growing by 5-6% a year, driven by the electrical and electronic, automotive, medical and construction sectors.

A slowdown in China's economic growth has caused the recovery in the country's downstream electronics and automotive industries to be slow. But long-term demand growth is still expected in sectors such as alloys, which are used in automotive and electronic products. Higher-than-average growth is predicted by BMS in the medium term for new applications, such as renewable energy - particularly solar modules - and light emitting diodes (LEDs).

Author: Liu Xin and Feliza Mirasol

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