China BPA seen under pressure in Feb, slight rebound likely in March

SINGAPORE (ICIS)–China’s bisphenol A (BPA) prices are likely to continue their downtrend this month but there may be slight recovery in March when business resumes in full swing in the country after Lunar New Year holidays.

Prices fell in recent month as downstream demand was weak and operating rates of domestic BPA plants remained robust at 85-90%, generating ample supply.

The prices were assessed at CNY12,500/tonne ex-tank in east China on 11 February, down by CNY1,450/tonne compared with the level on 8 January.

Sales of downstream epoxy resin was weak in December and prices mainly fell because end-user coating sector failed to pass on the costs and showed less interest in buying epoxy resins.

In early January, some epoxy producers said they would not build stocks before the Chinese Lunar New Year holiday (15-21 February) as a result of limited trades of their products and high stockpiles of BPA.

“Many traders are unlikely to finish sales of their January BPA contract cargoes in response to poor downstream demand,” said an east China-based trader.

The continuous falling of feedstock phenol prices was another key factor to the BPA downtrend, said a BPA producer.

Phenol prices lost as much as CNY1,875/tonne ex-tank east China from 18 December to 2 February. The prices had a slight rebound later, but lost further upward momentum. The closing price of phenol on 11 February was CNY9,125/tonne ex-tank.

Looking ahead, the BPA market is expected to fall further in late February but rebound in March, albeit slowly.

Most solid epoxy resin producers have had enough inventories and their plants will be off line till the end of February, so purchases will be limited.

In addition, February has fewer working days compared with other months, so some traders are likely to reduce prices to withdraw capital or remove cargoes.

However, some players are optimistic about the market conditions in March.

Supply will decrease, as downstream epoxy plants will resume production after the holiday and Ningbo Nanya’s 150,000 tonne/year BPA unit is set to be shut for maintenance at the end of March.

Meanwhile, producers and traders are expected to struggle to firm their offers for positive margins.

Accordingly, there will be limited downward room in March, even with possibility of a slight rebound.

Focus article by Jady Ma

ICN