Polycarbonate Prices Are on the Rise — What Does This Mean?

- May 27, 2014 2:28 PM
Categories: Commodities, Guest Post, Industry News | Tags: ,

Spend Matters welcomes a guest post from Vajid Idrees of Mintec.

Polycarbonate prices in both the US and Europe have risen since the start of the year – what is this plastic used for, why have the prices risen, and what is likely to happen in the future?

Polycarbonate

Polycarbonate is an engineering plastic, meaning that it has better properties than the more widely used commercial plastics such as polyethylene or polystyrene. PC is a strong, clear plastic that is highly resistant to impact. It is also ductile and light in weight, allowing it to be pressed into sheets or moulded into shape. The combination of these properties has ensured that it is widely used across a range of industries.

In North America, 26 percent of polycarbonate is used in the automotive industry for a variety of purposes such as instrument panels, door panels, headlight lenses, and bumpers, all of which help to make the vehicles lighter and therefore more fuel-efficient. The glass-like transparency of polycarbonate and its high impact strength has also led to it being the material of choice for lighting, glazing (including bullet proof glass), and sound walls. Its electrical resistance means fuse boxes and socket casings are often made of polycarbonate. The construction industry is also key to the polycarbonate market, with the electrics/electronics, sheet film, and appliances/homeware sectors together accounting for 34 percent of the North American polycarbonate market.

With 60 percent of polycarbonate used in either the automotive or construction sectors, the price of polycarbonate is closely linked to the economic recovery and the level of disposable incomes. When the 2008/09 financial crisis hit, demand for polycarbonate from its main markets fell, causing a five-year low in the price of polycarbonate. However, since the beginning of 2010, there has been an upward trend in prices coinciding with both the picking up of the construction and automotive industries, and also an increase in the cost of its feedstocks.

In more recent positive economic news, in March new car sales reached the second highest annualised level in seven years, and both new and previously owned home sales are starting to rise with the inventory of new homes for sale reaching the highest level since November 2010. These all point to an increase in demand, which is likely to push prices higher.

However, there is a significant level of overcapacity in the market, especially in Europe where operating rates are only at 70 percent, and this is likely to restrain further price rises. China is planning to build new production capacity, which will add to the global overcapacity. The US exports a significant proportion of its production to China and the increase in domestic supply there will reduce China’s need to import, meaning more polycarbonate should be available in the US in the longer term.

Comments

  • Dennis Tan:

    What will be the outlook of PC in 2015?

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