US chemical profile: polycarbonate

12 October 2012 09:35  [Source: ICB]

USES

Polycarbonate (PC) is an engineered plastic produced from bisphenol A (BPA) through building blocks benzene and propylene that offers clarity and high-impact resistance. Aside from the automotive segment, market strength has come from two other major market areas - the electrical/electronic and glazing and sheet segments.

US PolycarbonatePC weighs much less than glass and can be injected or moulded to produce various shapes for an assortment of purposes and is used in optical media such as CDs and DVDs, housing components, aircraft and missile components, water cooler bottles, safety helmets, medical equipment, as well as eyeglasses.

In 2012, optical media resumed showing signs of growth in the US as one producer has sought to increase its visibility in that segment.

ICIS monitors the general purpose (GP) moulding and GP extrusion grades in the US, Europe and Asia-Pacific, and tracks prices for optical grade PC in the Asia-Pacific report.

SUPPLY/DEMAND

Market demand for PC and other plastics should continue to benefit from a push to make cars and vehicles lighter in weight.

In the US, federal mandates calling for improved gasoline efficiency are pushing designers to attempt to find areas in which plastics can replace heavier metal, which can lead to fuel efficiency.

Bayer MaterialScience will conduct planned maintenance at its Baytown facility in Texas that will affect its PC and BPA lines from mid-November through mid-December. The Bayer facility is capable of producing 190,000 tonnes/year of BPA and 260,000 tonnes/year of PC.

PRICES

Pricing has rebounded from the first quarter of 2009 when GP extrusion in bulk sold for $1.10-1.20lb ($2,425-2,645/tonne) on the spot market. As the third quarter of 2012 came to an end, it was selling for $1.53-1.85/lb - an increase of 39-54% over the low in 2009.

Looking at pricing for the first three quarters of this year and comparing it with the same timeframe in 2011, prices are down by an average of 1.1%, with average prices at $1.755/lb in 2012, which compares with $1.775/lb in 2011.

Market participants keep an eye on the cost of benzene, a key building block for PC. The contract price for benzene, as well as the spot price, hit all-time highs this year as the contract price peaked at $4.60/gal, while the spot price peaked at $5.50/gal.

In addition, market participants keep a second eye on the price of West Texas Intermediate (WTI) crude oil. Usually when WTI moves up in price, benzene follows. But this year the trend changed in April.

US PolycarbonateSeveral producers have put forward price increase proposals, however, it remains unclear how successful they will be during the coming weeks.

Bayer MaterialScience's 15 cent/lb ($331/tonne, €255/tonne) PC price increase proposal had an effective date of 1 October. It is too early to determine what sort of success that price proposal has generated.

SABIC Innovative Plastics and Styron have been pushing their price increase proposals.SABIC was seeking an increase of 11 cents/lb effective on 10 September and Styron was seeking an increase of 14 cents/lb effective on 17 September.

Now it appears sellers are unable to increase prices to the desired levels, market sources said. Market participants have suggested the two price increases that were proposed in September have had a small amount of success in achieving higher prices.

A trader in the Asian market said every supplier's inventory seems long and they are willing to exchange large quantities of material for special prices to those out of their markets looking to make a deal. An oversupplied market and weak demand has given traders two reasons to insist that a price increase in the near term would be difficult to achieve.

In the European market, fourth-quarter PC prices rolled over because of poor demand and strong resistance from buyers.

TECHNOLOGY

The engineered plastic has been in use since the 1950s, when Bayer and GE started production processes to make PC from BPA.

Changes were made to the process to respond to environmental restrictions on phosgene, which was initially used in the process.

US producers include Bayer MaterialScience, SABIC Innovative Plastics and Styron. Other global producers include Asahi, LG Chemical and Mitsubishi.

PC can also be blended, or compounded, with other materials such as acrylonitrile-butadiene-styrene (ABS) to form alloys that meet specific downstream needs.

OUTLOOK

The use of PC in the automotive sector offers the potential for continued strong growth.

Blending/compounding PC with other materials such as ABS should continue to see strength as well. PC is benefiting from improved demand from the automotive segment in the US in 2012, as well as overall better demand for the material.

Sales of new cars and light trucks in the US are on pace to reach 13% more units in 2012 compared with 2011, and this has proven to be a positive sign for the PC industry, as well as other plastics.


By: Wesley Busch
+1 713 525 2653



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