Contract Negotiations
European August bisphenol-A (BPA) contract negotiations are still ongoing. Some market players have already settled at rollovers or slight decreases of €30-40/tonne on freely negotiated contracts because of improved availability and weak demand.
Increasing imports from China and Russia were also given as reasons for the rollovers. One buyer said that it has not seen such good conditions on the market for at least 18 months.
However, because feedstock costs have increased quite significantly, a price reduction was not possible for everyone.
One producer said that even if they wanted to raise the price of BPA following the feedstock benzene and phenol increases, they could not have done so because most buyers have resisted attempts of an increase.
Producers who have already settled quoted prices at €1,700-1,750/tonne FD NWE.
Buyers who have already finalised their contracts quoted prices at €1,650-1,700/tonne FD NWE.
One buyer has quoted its price at €1,550-1,560/tonne FD NWE, but this was not seen as representative of the market.
Most players said that the INEOS Phenol force majeure declared on 15 July has not had any effect on the market because during the summer holiday season demand generally drops.
This may change in September when demand picks up as plants restock to fill up inventories and INEOS Phenol will shut for four weeks of maintenance.
INEOS Phenol normally stock up material in August for its annual shutdown in September, but now it is prevented from doing so by the force majeure.
Formula
Market players with formula contracts have given mixed feedback regarding price movements. Those with contracts based on July feedstock benzene and phenol contract prices have achieved reductions of around €100-130/tonne.
However, buyers with contracts based on August feedstock costs have had to agree to increases of around €130/tonne.
Spot
There has been little spot activity on the market because demand is weak and the amount of material currently available on the market satisfies buying interest.
Asia
Nan Ya Plastics continues to face a delay in restarting its 100,000 tonne/year No 3 and 130,000 tonne/year No 4 BPA lines at Mailiao in Taiwan, following a pipeline blast at the site. The immediate effect of this delay remains uncertain as the downstream epoxy resins and polycarbonate segments are persistently dull.
Most Asian buyers are thus concerned about the supply condition for the coming few weeks as this major BPA producer is still out of the market. This prompted other producers to raise their offers for the remainder of August shipments.
Upstream
European benzene values slumped towards the end of the week over mounting macroeconomic concerns, although market fundamentals are keeping supply/demand dynamics balanced-to-tight. The August contract was confirmed at €886/tonne FOB NWE, up €132/tonne from the previous month. Spot values for August were at $1,270-1,290/tonne on Friday afternoon, down $5-10/tonne from last week’s close.
The August European phenol contract price has increased by €132/tonne following the same increase in the value of the August benzene contract price.
Downstream
European polycarbonate market players expect August will be quiet because demand traditionally drops during the summer holiday season in Europe. Some feel the market is unusually quiet because of the poor macroeconomic performance of some southern European states. A number of players are worried that the market will not pick up even in September.
European August epoxy resins contract negotiations are underway and likely to decrease by €70-150/tonne because of slowing demand and declining feedstock costs. Producers said that there is a downward pressure on prices because demand has slowed, there are no production issues and there is more material available on the market.
Covering Editor: Janos Gal
($1= €0.71)
This week on ICIS ( www.icis.com ):
04/08/2011 22:11 US August cumene prices increase by 5% on higher feedstocks
04/08/2011 12:55 KBR secures technology contract for new China phenol/acetone plant
01/08/2011 12:04 Europe August phenol contract up €132/tonne on benzene increase
