2. Falling China demand forces PA producers to
look for new markets
• Persistent low demand in China is forcing Asian
phthalic anhydride producers to look for new
markets and end-users, market sources said March
27.
• Asian PA prices averaged $1,369/mt CFR China in the
first quarter of 2014, down 9% Q1 2013, Platts data
showed. PA prices had averaged $1,502/mt CFR
China in Q1 2013.
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4. PA demand in China falls (cont..)
• Orthoxylene, which is a feedstock for PA, averaged
$1,308/mt in Q1 2014 down $272/mt or 17% year on
year.
• The PA/OX spread averaged at $61/mt in Q1 2014 as
compared to $78/mt in Q1 2013, data showed.
• On March 27, Platts assessed the PA markers at
$1,265/mt CFR China, down $35/mt week on week, and
at $1,275/mt CFR Southeast Asia, down $50/mt week on
week.
• Offers for PA were heard at $1,290/mt FOB Korea this
week but producers continued to rue about low demand.
4
5. Other Asian producers running at near
capacity
• "Not only have the PA prices come down over the
past one year it is becoming uneconomical to
produce it considering the consistently sliding
margin," a South Korean producer said.
• Major producers in South Korea and Taiwan like
Hanwha, Aekyung and Nan Ya were still heard
running their plants at near full capacity this week
even as those in China were heard running their
plants at 60-70% of capacity.
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7. Downstream DOP demand seen falling
sharply in China
• More than 50% of Asian PA still goes into making dioctyl
phthalate.
• But as DOP demand has been dropping amid opposition from
environmental groups, "producers are gradually shifting to the
production of other plasticizers like DOTP [dioctyl
terephthalate] and DINP [Di-isononyl phthalate] as these are
considered safer to use," another South Korean producer said.
• DOP prices averaged $1,537/mt in Q1 2014, down $214/mt,
or 12%, year on year from an average of $1,751/mt.
• "DOP is a dying product as several converters in China who
manufacture products for the European and US export
markets don't use it anymore," a Chinese DOP producer said.
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8. Chinese PA import figures slid sharply
• The strategy to win customers by offering products at
lower prices has also not worked in China.
• "South Korea-origin PA is often offered into China on a
CFR basis at the same price as FOB Korea, but there are
still no takers. Most of the Asian producers are only
meeting their contract commitments in China," a Chinese
trader said.
• The falling demand for PA is best represented in Chinese
PA import figures that have slid sharply over the first two
months of 2014.
8
9. China’s economy expected to grow at a
lesser rate in 2014
• "DOP demand and prices take an immediate hit from the
predictions of a lower growth rate in China and low
Purchasing Managers' Index figures published monthly,"
a Chinese trader said. "Occasional curbs on the banking
market also impact DOP demand."
• In mixed Chinese industrial data, the HSBC-Markit China
Purchasing Managers' Index fell to 48 in March from 48.5
in February, according to data released April 1.
• A separate PMI published by the Chinese government
edged up to 50.3 in March from 50.2 in February. The
country's economy grew at a rate of 7.75% in 2013 but is
expected to grow at lesser rates in 2014 and 2015
according to the International Monetary Fund.
9
10. China imports of PA down almost 45%
• China imported 9,085 mt of PA in January and
February down almost 45% year on year from a
similar period in 2013.
• "DOP demand and prices take an immediate hit from
the predictions of a lower growth rate in China and
low Purchasing Managers' Index figures published
monthly," a Chinese trader said. "Occasional curbs on
the banking market also impact DOP demand."
10
11. China Purchasing Managers' Index fell to
48 in March
• In mixed Chinese industrial data, the HSBC-Markit
China Purchasing Managers' Index fell to 48 in March
from 48.5 in February, according to data released
April 1.
• A separate PMI published by the Chinese
government edged up to 50.3 in March from 50.2 in
February. The country's economy grew at a rate of
7.75% in 2013 but is expected to grow at lesser rates
in 2014 and 2015 according to the International
Monetary Fund.
11
12. Click below to download the PDF
12
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13. • With demand for PA from China falling rapidly, Asian
producers have looked to increase exports to other
markets -- mainly India and South America, said sources.
• "We are finding new customers in places like the Middle
East, India, Southeast Asia and South America as demand
in China has been dropping," a South Korean producer
said.
• In India, a major volume of PA goes into making of paints
and dyes.
• But here also producers are facing problems as the
country has imposed an anti-dumping duty of $94/mt on
PA imports.
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Asian producers looking to
other markets to export PA
14. India considered a viable destination for
PA
• Two local producers -- IG Petrochemicals and
Thirumalai -- have repeatedly petitioned the
government to protect their interests which led to
the imposition of the duties, said sources.
• "As demand for PA in China came down, India was
considered a viable destination for Asian origin PA.
Producers in South Korea tried to sell huge volume of
products into India at a loss to win customers," a
Mumbai-based trader said.
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