OUTLOOK ’18: Asia PC prices poised to see limited fluctuations

Source: ICIS News

2018/01/16

SINGAPORE (ICIS)--Asia’s polycarbonate (PC) prices are expected to keep to a broadly stable trend in the first half of 2018, amid protracted healthy demand for most grades.

Spot prices of PC are likely to track movements in upstream raw material bisphenol A (BPA) markets, particularly in China.

The spread between PC and BPA has generally been healthy averaging at the high $1,000s/tonne, from average levels at the low $1,000s/tonne in the first half of 2017, providing incentive as a whole for downstream PC producers in Asia Pacific.

In the week ended 10 January, spot prices of GP moulding-grade PC or the injection grade averaged at $3,700/tonne CIF (cost, insurance and freight) China, representing a substantial increase of some 40% from average levels during the same period in 2017, according to data by ICIS.

However, the early part of the year or first quarter may see a slowdown prior to the Lunar New Year holiday that takes place from 15 February 2018.

“Prices [of optical-grade PC] may taper off in February as the automotive sector is expected to slow down,” a northeast Asia-based market source said.

Supply availability of PC is expected to get a boost from China's Wanhua Chemical’s 70,000 tonne/year new plant located in Yantai, Shandong province, as it gradually starts production.

The PC plant’s average monthly consumption of raw material BPA is estimated at up to 5,000 tonnes if running normally, according to market participants.

Depending on crude oil’s price direction, “the new PC plant should keep demand stable at least [early 2018]”, a China-based market source said.

BPA is used in the production of PC resins.

China's manufacturing purchasing managers’ index (PMI) stood at 51.6 in December 2017, sliding from 51.8 in November, latest official data showed.

The lower PMI reading was a result of lower operations at plants to meet tighter environmental regulations and national holidays in China.

The PMI is a barometer of an economy’s manufacturing activities, with a reading of 50 or higher indicating an expansion, while a number below that denotes a contraction.

With expanded plant capacity from the end of 2017, this is expected to lift spot supply availability although it remains to be seen whether consumer demand will remain consistent further out.

Upstream crude oil and related market price volatility may influence market sentiment.

Strong gains in upstream raw material BPA prices in China have in part lifted spot prices of most PC grades in the previous year’s fourth quarter.

Outlook article by Melanie Wee