2011 World Polycarbonate, ABS Analysis

During 2010 market prices for polycarbonate increased significantly, pushed initially by rising raw material costs and then by a tightening supply/demand balance, as low inventories throughout the chain at the start of the year, combined with robust demand and supply issues, led to a tightening market, as per Chemical Market Associates, Inc. (CMAI). Prices increased more rapidly in North American and Asian markets than in Europe, where the lingering recession dampened demand and upward price movements until the middle of the year. In the latter stages of 2010, prices are moderating once again as supply becomes easier. In recent years, due to oversupply, ABS prices have fallen relative to competing polymers and this has also served to promote growth for ABS, particularly in North America and Europe. Furthermore, the recent narrowing of the price spread between polypropylene and ABS, particularly in Europe, has led to the shift in some automotive applications from polypropylene to thin-wall ABS designs. However, in 2010 ABS prices have increased once more partly due to higher upstream raw material costs from benzene and styrene, propylene and hence acrylonitrile, and butadiene. Shortages of butadiene in various regions also led to restrictions in the production of ABS and, faced with recovering demand, this led to a tightening ABS market and consequently higher prices this year. Market Outlook Global demand for polycarbonate is expected to grow at an average annual rate of around 5.8% over the next five years, reaching around 4.4 mln metric tons by the end of 2015. The fastest growth will be in the automotive glazing sector albeit from a very low base. Electrical/electronics applications will enjoy good growth rates in the forecast period and will become the largest volume application for polycarbonate by 2015. The key driver for this market will be the increased use of consumer electronics like personal computers/laptops, flat screen televisions and office equipment like printers in the developing regions, like India, Southeast Asia and China. Demand for optical media, on the other hand, will contract over the next five years. Substitution by other media is occurring more rapidly than originally expected, and it is estimated that the U.S. market contracted by around 4.5 percent in 2010. There are some developing economies where optical media demand is still increasing, but overall on a global basis the market has started to decline. Polycarbonate supply is currently spread relatively evenly around the world amongst the four major regions of North America, Europe, Northeast Asia and Southeast Asia. However, Northeast Asia, which is already the largest producing region, is also growing the most rapidly in terms of capacity additions and so will ultimately dominate all other regions in terms of supply. The global ABS market is forecast to continue to grow ahead of global GDP, at the rate of about 5 percent per year over the next five years. The highest growth sectors in the future will be in the transportation and appliance markets. The appliance market will grow at an average rate of over 5% and will continue to be the largest market by 2015. Over next two years, we expect supply growth to outstrip demand growth, especially due to the new capacity coming on line in China, thus reducing operating rates. However, during the latter stages of the forecast period, the capacity-demand gap will close in Northeast Asia as demand for ABS for domestic use in China, and exports of appliances, computer equipment, and cars, continue to grow, and the pace of new capacity additions slows.
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