Chemical Profile: Europe BPA

08 February 2013 09:56  [Source: ICB]

Bisphenol A's (BPA) main outlet is in the production of polycarbonate (PC), which accounts for about 65% of consumption. The second-largest is epoxy resins, responsible for roughly 30% of consumption. Other uses include flame retardants (mainly tetrabromobisphenol A), unsaturated polyester resins and polyacrylate, polyetherimide and polysulphone resins.

Supply in Europe is balanced to tight as a result of production cutbacks and maintenance shutdowns during the fourth quarter of 2012. Sales to the downstream industries are poor and many integrated and non-integrated producers have cut operating rates. Most producers in Europe see no light at the end of the tunnel in 2013, but say there could be some recovery in 2014. As that is so far ahead, however, there is a lot of uncertainty about how the market will perform.

In Asia, BPA prices increased during January, driven by production cuts and tight supply. Most BPA producers in Asia have decided to shut down plants in order to rein in supply in light of bleak demand from most derivative markets. Exports and imports between these two major trading regions have become scarce as neither European nor Asian players are willing to take the risks involved with long lead times.

As most BPA producers in Europe are also epoxy resins and PC producers, the majority of BPA in Europe is used by the producers themselves in their derivative plants. Epoxy resins and PC producers that are not feedstock-integrated buy BPA using long established formula contracts that derive the price of BPA from feedstock benzene, propylene, phenol or acetone.

These formula contracts are settled on a monthly basis following feedstock settlements. There are also spot and freely negotiated deals if surplus BPA is on offer as a result of weak demand from the downstream PC and epoxy resins markets. However, this is usually short-lived as in such circumstances BPA producers cut operating rates and spot supply becomes scarce.

As a result, during the six months up to February 2013, the price of freely negotiated and spot BPA prices hardly moved as there was next to no demand beyond contracted volumes. Buyers were reluctant to commit to large quantities of BPA amid poor epoxy resins and PC demand driven by weak macroeconomic conditions. Freely negotiated contract prices for January were at €1,570-1,600/tonne free delivered northwest Europe (FD NWE) on 1 February; spot prices were at €1,550-1,600/tonne FD NWE.

BPA is produced by the condensation of phenol and acetone in the presence of an acid catalyst (hydrogen chloride) and usually a promoter such as methyl mercaptan. Cationic ion exchange resins can replace the acid catalyst in newer plants. After the reaction and recovery of acid and phenol, the BPA is washed with water, neutralised with milk of lime and distilled under vacuum. Newer processes employ distillation and extractive crystallisation under pressure to purify the BPA. Two grades are produced: one for epoxy resin production and a higher purity grade for PC manufacture.

BPA is a crystalline, prilled or flake material with a slightly phenolic odour. It is a slight fire hazard, but the dust can form explosive mixtures with air. Dust, vapour and solutions can irritate the eyes, lungs and skin. Debate continues on BPA's potential endocrine disrupting properties, but studies on low-dose effects have been inconclusive. Most recently, France banned BPA in all food contact materials for babies from 2013 and for adults from 2015.

Forecast growth rates have been adjusted down because of the global economic downturn. Operating rates have been cut globally and there is no sign of an improvement any time soon, most market sources said. This is because - as for BPA - output in the downstream industries has been cut drastically, with many epoxy resins and PC producers also shutting down completely for several weeks of maintenance.

In Europe and the US, demand growth for BPA will be mainly driven by new applications for PC, including the replacement of automotive parts, CDs and DVDs, and in the construction industry. In Asia, new PC capacity continues to be built and Asian companies are also deciding to enter the phenol chain. Global bisphenol A nameplate capacity in 2013 is 5.8m tonnes.

By: Janos Gal
+44 208 652 3214

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