China Bisphenol A Market Weekly: Weak Pattern of Supply and Demand and Reconstruction of Global Industrial Chain

MARKET Fact: Structural Pressure in Bottom Oscillation

in the past week, China's bisphenol A market showed a narrow range of shocks, with the price center of gravity fluctuating in the range of 7600-7900 yuan/ton. On December 17, the price of the mainstream market in South China was raised by 50 yuan/ton. Traders maintained a high quotation, referring to the implementation price of 7600-7650 yuan/ton. Downstream, it is just necessary to follow up the replenishment of small orders. On December 19, the market price remained stable, and the reference price of domestic sources in East China was about 7620 yuan/ton. According to BOC International Weekly, bisphenol A (East China) ranked among the top five weekly average price increases of 100 chemical varieties tracked, indicating its relative resistance to decline during the cycle.

From a global perspective, the global bisphenol product market is about $1.53 billion in 2024 and is expected to reach $1.992 billion in 2031, with a compound annual growth rate of 3.9 per cent. As the world's largest producer and consumer, China has a production capacity of 5.931 million tons of bisphenol A in 2024, accounting for 50% of the global production capacity, with a compound annual growth rate of 30.82 compared with 2.025 million tons in 2020. The rapid expansion of production capacity has brought supply pressure, with the average price of about 9636 yuan/tonne in 2024, down 3.49 percent year-on-year, and the current price range of 7600-7900 yuan/tonne is close to the cost line.

The core contradiction of the market is the weakening of cost support brought about by the increase of upstream phenol supply, and the game between the weak demand of downstream polycarbonate (PC) and epoxy resin. Near the end of the year, production enterprises are facing the pressure of capital withdrawal, and the market trading is dominated by small orders with rigid demand, and the industry generally holds a cautious wait-and-see attitude towards the future market.

Supply-side analysis: capacity expansion and poor cost transmission

the upstream raw material market was weak this week. Pure benzene is affected by the contradiction between supply and demand, the price remains low, the absolute level of East China port inventory is still high. The trend of propylene market moved down, and the market price in Shandong fell by 175 yuan/ton to 5915 yuan/ton in the week. The price of dual raw materials is weak, which theoretically alleviates the cost pressure of the phenol ketone plant, but the simultaneous low price of phenol leads to poor cost transmission.

According to Huatai futures data, phenol ketone production profit of about -952 yuan/ton, continued to be in a deep loss state. The phenol operating rate increased significantly from 67.3 per cent to 81.0 per cent, and the supply-side pressure increased significantly. In 2024, China's phenol production capacity is expected to reach 6.35 million tons/year, with an output of about 4.97 million tons, an increase of 18% year-on-year, and an average operating rate of 73%. Shandong Fuyu Petrochemical Company lowered its phenol price by 100 yuan/ton to 6200 yuan/ton, and its 250000-ton/year phenol ketone plant was operating normally. Zhejiang Petrochemical Phase II and other devices have planned maintenance, but the impact on the overall supply is limited. Shandong Ruilin's new device may be delayed, easing future supply growth expectations.

China's bisphenol A supply capacity is also rapidly increasing. In 2024, the number of production enterprises will increase from 9 in 2020 to 20, with a capacity of 6.01 million tons/year, up 25% year-on-year, but the overall operating rate will drop to 64.4%. Heilongjiang Longjiang Chemical, Qingdao Gulf Chemical, Shandong Fuyu Chemical, Yantai Wanhua Chemical, Huizhou Zhongxin Phase II and other new units put into operation. Capacity concentration has been declining, with CR5 falling from 77 per cent in 2020 to 44.11 per cent in 2024. Kostron's production capacity of 600000 tons (10.12 percent), Wanhua Chemical 576000 tons (9.71 percent), Zhejiang Petrochemical, Ruiheng New Material and Hengli Petrochemical are 480000 tons (8.09 percent each).

Upstream phenol supply is abundant and price pressure, weakening the cost support for bisphenol A, is the main factor to suppress the price upward.

Demand-side assessment: changes in downstream consumption structure and slowing growth

the downstream polycarbonate (PC) market as a whole is weak. Cangzhou Dahua (SH:600309), a listed company, said that its 50000-ton polycarbonate technological transformation project has been successfully implemented and produced qualified products, but bisphenol A products are currently facing certain market pressure. Since 2022, PC has surpassed epoxy resin to become the largest downstream consumption area of bisphenol A, with the proportion rising to 65% in 2024. China's PC production capacity increased from 2.06 million tons in 2020 to 3.79 million tons in 2024, and 2.53 million tons in January-October 2024, up 18.22 percent year-on-year. However, the current PC industry chain demand is weak, the procurement of bisphenol A support is limited.

Epoxy resin as bisphenol A another major downstream (accounting for about 20%), its terminal buying mood is cautious, only just need small single replenishment mainly. China's epoxy resin production capacity increased from 2.048 million tons in 2019 to 3.86 million tons in 2024, but the industry's operating rate fell to a recent low of 53% in 2023-2024, prices fell sharply, and some corporate profits were negative. Demand is closely related to the prosperity of real estate, automobiles, electronic appliances and other industries, and the current overall performance is flat.

From the end of the consumer market, home appliances and other hard rubber products gradually entered the end of the procurement season, demand slightly warmer. However, styrene downstream PS, ABS, EPS still face high inventory problems, resulting in downstream factories on high-priced raw materials resistance, this sentiment indirectly transmitted to the more upstream industrial chain. In 2024, China's bisphenol A consumption increased to 3.9 million tons (another data source shows 4.2252 million tons), an increase of about 12-18% year-on-year, but the growth rate was not as fast as the expansion of production capacity.

Trade Pattern and Market Outlook

china's bisphenol A trade pattern has undergone a fundamental change. Imports fell to 51000 tons in 2024, down 70.14 per cent from the same period last year, and foreign dependence was only 1.2 per cent, basically achieving self-sufficiency. Exports surged by 400 per cent to 25200 tonnes, and China is shifting from a net importer to a net exporter. The trade deficit fell from a high in 2022 to $0.253 billion in 2024, down 82.58 percent year-on-year.

This week, the profit margin of each link of the phenol industry chain was compressed, showing a pattern of differentiation. Phenolic ketone plant continued to suffer deep losses, bisphenol A link profits by upstream cost loosening and weak downstream demand double squeeze. PC and epoxy resin industry profit margins are limited, downstream of the raw materials difficult to form a strong cost transmission and procurement drive.

The current core contradiction is the game between the recovery of upstream supply and the weak downstream demand. Phenol operating rates rebounded sharply and market supply shifted to easing, leading to weaker prices and eroding bisphenol A cost support. Downstream PC and epoxy demand growth is weak, only to maintain just need to purchase. The market is caught in the dilemma of "insufficient cost support and limited demand pull.

In the short term, this contradiction is difficult to alleviate. It is expected that the bisphenol A market will continue to present a "supply and demand two weak" pattern, the price to the bottom of the shock. Prices in East China will continue to fluctuate in the range of 7600-7900 yuan/ton, with the upside constrained by weak demand and abundant supply, while the downside is limited by rigid demand support and current prices are already at low levels.

Strategy recommendations and risk tips

for international chemical traders and supply chain practitioners, it is recommended to adopt the following strategies: short-term (1-2 weeks) on-demand procurement, maintain low inventory turnover, pay attention to the support level near 7600 yuan/ton, and replenish small orders in batches. In the medium term (1 month), we will watch cautiously, focusing on whether the planned overhaul loss of phenol in January (about 10000 tons) can bring support to the market, as well as the downstream pre-Spring Festival stocking dynamics. Producers and traders recommend moderate shipments at high prices, reduce inventory pressure, and ensure cash flow in the current market environment is more important than the pursuit of high profits. It is recommended to control the inventory days within 10-15 days.

In terms of market risk, upside risks include: unplanned maintenance of major phenolic or bisphenol A plants may tighten supply in the short term. Downside risks include: phenol operating rates will continue to weaken cost support, PC, epoxy resin plant operating rates at the end of the year if further decline will reduce the purchase of bisphenol A, international oil prices low volatility, the overall cost of chemicals support weakened, may exacerbate the bearish sentiment.

In the next five years, China's bisphenol A still has more than 2 million tons/year of projects under construction, the market supply and demand pressure is obvious, and the competition will be more intense. Epoxy resin industry is facing the overall "reshuffle", some small, no upstream and downstream supporting enterprises may withdraw. For international market participants, it is necessary to pay close attention to the impact of China's capacity release on the global supply pattern and assess the changes in China's pricing power in Asia and the global market after the shift from net imports to net exports. Upstream phenolic ketone plant start-up adjustment, as well as downstream terminal areas (home appliances, automotive, electronics) order changes, will be the key variables to break the current deadlock.