01 March 2013 17:32 [Source: ICIS news]
LONDON (ICIS)--High feedstock costs are a cause for concern for many buyers in the European bisphenol A (BPA) market, which fear they will find it difficult to pass on the increases, sources said on Friday.
"High prices are giving me a lot of headache and my managers are not very happy about the high prices either so I am hoping they will start to go down soon," a BPA buyer said.
Feedstock benzene and propylene prices have increased this week and BPA contract and spot prices are likely to go up in line with raw material costs. Most sources expect a €30-40/tonne ($39-52/tonne) increase because of tightening supply and stable demand.
The buyer said it is finding it difficult to pass on the increases, and added at the same time sourcing material at a lower price is nearly impossible.
Demand has not changed much in the past few months, but supply has been cut, which has made the market slightly tighter, the source said. In addition, imports from Asia have dropped, because of higher prices in that region, so the length in Europe has become less obvious.
Asian material is being offered at around $2,000/tonne (€1,540/tonne) FOB (free on board) China, which, including freight costs and 6.5% import duty, makes it unviable to import material.
A coatings producer called demand from the downstream polycarbonate (PC) and epoxy resins industry "pathetic", adding that this could be the case until the third quarter of this year. It agreed that BPA prices in March could increase by €40/tonne, which will be hard to swallow.
A major BPA buyer said that the PC industry is under mounting pressure to increase prices, but with weak demand and long supply it may be difficult to achieve the targeted levels. It said demand for spot material is near zero and it has not ordered any additional spot cargoes in weeks.
The big questions now are how feedstock acetone prices will perform and whether the tightness and high prices in upstream markets will ease in coming months.
"What is most difficult to deal with is the inability to make any predictions about future market direction," a trader said. "Even last year I was able to forecast three months ahead, whereas now it is impossible to make market estimates for two to four weeks in advance," it added.
Last week, one major producer said it will target €50/tonne increases in March, while a trader said whether it will increase prices will depend on March feedstock cost developments, although it was sure prices would not drop next month. A second producer said that BPA prices will continue to rise and availability will be reduced as a result of scarce acetone feedstock.
Contract settlements are expected next week.
($1 = €0.77)
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