Asia BPA near 12-month low, outlook bearish on dismal import demand

Melanie Wee

19-Nov-2018

SINGAPORE (ICIS)–China’s bisphenol A (BPA) prices have tumbled close to a 12-month low amid dwindling demand, and weakness of the Chinese Yuan currency to the US dollar that might persist, according to market sources.

BPA spot prices stood at $1,450/tonne on a CFR (cost and freight) China basis as of 16 November, extending the preceding week’s decline by $100/tonne.

Spot prices in the latest week were also levels not seen since late-November 2017, ICIS data showed.

The erosion of the Chinese Yuan to the US dollar has rendered imported material uneconomical, with the bulk of BPA purchases confined domestically.

“The gap in buying and selling ideas is wide … no one wants to import, it is better to secure domestically,” a northeast Asia-based market source said.

The bearish market conditions have prompted some producers in China and parts of northeast Asia to trim BPA plant operating rates as well as facilities in downstream sectors to mitigate squeezed margins.

Firm upstream phenol costs in recent weeks have eroded producers’ margins, in part resulting in producers less inclined to lower asking levels.

Looking ahead, the near term market sentiment bore a pessimistic undertone, with prospects of a rebound in import prices expected to be slim.

“Depending on where upstream phenol prices in China are going… maybe [local] BPA prices are bottoming out and will stabilize soon,” a separate northeast Asia-based market source said.

On the flip side, some regional suppliers were seen shifting their focus to term allocations or other outlets out of Asia where economics were more favourable.

Chinese domestic markets have weakened considerably amid downbeat demand in downstream application sectors.

In East China, Chinese domestic prices were at yuan (CNY) 12,100-12,200/tonne EXWH (ex-warehouse), falling by CNY 400-500/tonne EXWH from the preceding week, and a decline of some 17% from a month earlier, according to ICIS data.

Focus article by Melanie Wee

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