Europe feedstock volatility hurts BPA demand

19 October 2012 09:50  [Source: ICB]

High feedstock costs are making bisphenol A (BPA) and epoxy resins market participants concerned about the future direction of the market, sources say.

"I am worried about volatile feedstock costs and that perhaps the high prices are here to stay," a BPA buyer said on the sidelines of the European Petrochemical Association (EPCA) conference.

"We understand why producers are trying to increase [BPA and epoxy resins] prices, but as buyers we cannot accept them, because we cannot pass them on as demand is very weak," the buyer added.

MARKET SHORTAGES

Poor utilisation rates and high feedstock costs are likely to push BPA and epoxy resins prices up and create shortages in the market if output is further reduced or plants shut down to carry out maintenance, a producer said.

EU BPAIn September, Spolchemie shut its two epoxy resins lines in Usti nad Labem, Czech Republic, for two weeks. The plant has a 60,000 tonne/year nameplate capacity.

In addition, Momentive planned to shut down its 100,000 tonne/year epoxy plant in Pernis, the Netherlands, for 12 days initially but in the end it was shut for nearly three weeks because of a technical glitch, a source said.

In October, Momentive's 160,000 tonne/year BPA plant will be shut for five weeks for planned maintenance. The company said this is to install a new control system that will make production more efficient. This has been planned for quite some time and the company has prepared for the shutdown.

In November, Dow Chemical is planning to shut its 70,000 tonne/year epoxy resins plant in Stade, Germany for an undisclosed time. The plant was initially scheduled to shut in September, but the company said they were not able to create enough stock levels because of strong demand, so it had to delay the shutdown.

"I think all these maintenance shutdowns are signs that the industry is struggling and producers are trying to balance supply and demand by cutting production" an epoxy resins buyer said. Demand for both products is much weaker than usual as people are waiting to see what happens with prices, an epoxy producer said.

Since October 2011, feedstock benzene prices increased from €701/tonne ($910/tonne) to €998/tonne in October 2012. Feedstock propylene prices increased from €1,068/tonne in October 2011 to €1,140/tonne in October 2012.

However, liquid epoxy resins (LER) prices dropped from €2,550-2,650/tonne FD (free delivered) NWE (northwest Europe) to €2,540-2,600/tonne FD NWE during the same period. BPA prices pretty much stagnated during the past 12 months.

This means that most of the feedstock cost increases were swallowed by downstream producers, which have struggled to pass them on in a weak market.

"This cannot carry on forever. Derivative producers will either go out of business, or will have to force prices up, which will not be good for anyone," a source said.


By: Janos Gal
+44 208 652 3214



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