China BPA nears eight-month high; may extend gains on tight supply

SINGAPORE (ICIS)–China’s domestic bisphenol A (BPA) prices have surged to near eight-month highs and look set to continue rising on the back of strong downstream demand and tight availability of spot cargoes, industry sources said.

At the close of trade on 25 October, BPA prices in east China stood at Chinese yuan (CNY) 11,000/tonne ($1,657/tonne) ex-tank, the highest level since 8 March 2017 and represented a 16.1% increase from 21 September, according to data compiled by the China editorial team at ICIS.

Major domestic BPA producers have small volumes to spare for spot sales and have either cut contract volumes or postponed contractual cargo deliveries to customers this month amid plant turnarounds, market sources said.

In east China, Bluestar Nantong Xingchen Synthetic Material shut its 150,000 tonne/year BPA plant for turnaround on 13-30 September, while Chang Chun Chemical’s 135,000 tonne/year unit had undergone maintenance from 20 August to 3 October.

Traders rushed to sell their cargoes ahead of a week-long holiday early this month, further tightening the spot BPA availability for the rest of October, industry sources said.

China was on holiday on 1-8 October for its National Day and Mid-Autumn Festival.

On the demand front, downstream epoxy resins producers are actively replenishing their inventory of feedstock as they typically scale up production at this time, they said.

The September-October period is traditionally the peak demand season for epoxy resins.

Meanwhile, BPA cargo holders were keen to hike offers as they have had thin margins during April-September 2017, when prices could not move up because of weak demand and stable supply, market sources said.

In November, market players expect demand for BPA to continue rising with the expected start-up of a downstream polycarbonate (PC) plant.

The new 70,000 tonne/year PC plant of Wanhua Chemical in Yantai, Shandong province, is estimated to consume up to 5,000 tonnes of BPA each month, market sources said.

BPA may also find support from rising feedstock phenol prices due to tightened supply, according to the sources.

Phenol prices in east China stood at CNY7,900/tonne ex-tank on 25 October, up by CNY175/tonne from 20 October.

Other market players, however, said that BPA prices may retreat a little after a recent strong uptrend due to some resistance posed by the epoxy resins sector, which accounts for around 60% of China’s total BPA consumption.

Moreover, import supply of BPA into China will also increase, as Thailand’s PTT Phenol boosts exports from its 150,000 tonne/year BPA plant in Map Ta Phut, according to traders.

But imports from Thailand are currently subject to antidumping probe, which was launched by the Chinese government in March this year.

Most market participants expect the Chinese government to impose anti-dumping duties (ADDs) on BPA imports from southeast Asian country when the investigation is completed in the  next two months. Thailand has a 36% share of China’s annual BPA imports, based on China Customs data.

Focus article by Jady Ma

($1 = CNY6.64)

Picture: Bisphenol A (BPA) is used in plastic bottles and food containers. (Source: Sipa Press/REX/Shutterstock)

ICN