OUTLOOK '08: Asia BPA prices to remain buoyant
02 January 2008 08:12 [Source: ICIS news]
By Jeremiah Chan
SINGAPORE (ICIS news)--Bisphenol-A (BPA) prices in Asia are set to be stable to firm in the first half of the new year, due to upward price pressure from additional downstream capacities coming on stream and growth in the downstream epoxy resin and polycarbonate (PC) sectors, market sources said on Wednesday.
“The global epoxy resin demand is expected to grow by 7-8% this year and PC demand by 5-6%,” a Japanese trader said, adding that turnarounds at key regional BPA producers could result in supply snugness during the first half of 2008.
Taiwan’s Nan Ya Plastics will be conducting a 15-day turnaround at its 90,000 tonne/year No 1 BPA line in May and Taiwan Prosperity Chemical Corp (TPCC) will be shutting down its 80,000 tonne/year plant for three weeks in March.
Coupled with scheduled maintenance works at other production facilities located in Japan and Korea in the first half of the year, most sellers agreed supply in the region could be squeezed until June.
Market players will also be watching Chinese domestic prices very carefully, as crashing BPA prices following government plans to tighten credit controls towards the end of the year have also led to reduced buying sentiment from end-users in the key Chinese market, thus preventing producers from hiking prices.
Most market participants, however, expected prices to recover prior to the Chinese Lunar New Year holidays in early February, which traditionally heralds a surge in demand as buyers build up their inventories before the festivities.
“BPA prices will recover in the first half of the coming year, as basic demand and supply fundamentals are still healthy,” a regional trader said, adding the current depressed prices were a temporary knee-jerk reaction to the Chinese credit crunch phenomenon.
Additional downstream capacities which have come on stream recently include Formosa Chemicals & Fibre Corp’s (FCFC) 75,000 tonne/year PC plant located in Taiwan, and Chang Chun Plastics 50,000 tonne/year epoxy resins production facility located in Changshu in the eastern province of Jiangsu, China.
On the other hand, BPA market sentiment could falter after May 2008, as additional BPA capacities would enter the market, which might apply downward pressure on prices, end-users and traders said.
“We will be awaiting the start-up of the new regional and domestic BPA production lines, which will probably drive prices down,” the purchasing manager of a Chinese epoxy resins plant said in Mandarin.
Kumho P&B will be expanding its existing BPA production capacities in South Korea by 140,000 tonnes/year in May 2008 and Mitsui Chemicals is planning to commission a 120,000 tonne/year BPA plant in Shanghai Chemical Industry Park (SCIP) in August 2008. Blue Star New Chemical Materials will also commission a 90,000 tonne/year BPA plant in Nantong, Jiangsu province in the second half of 2008.
This influx of production capacities would likely dampen prices in the second half of 2008, most traders and producers agreed.
“The additional material entering the market might result in an oversupply and some producers could experience inventory pressure to offload cargoes,” a regional trader said.
Some producers and traders offered a contrarian view however, saying high upstream phenol/acetone numbers could underpin BPA prices in spite of any excess supply in the second half of the year.
Key Asian suppliers of BPA include Nan Ya Plastics, Mitsui Chemicals, LG Chem, and Kumho P&B.
ICIS Copyright © Reed Business Information 2009
Author: Jeremiah Chan+65 6780 4359
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