China's PO price has been increasing from early May 2013

GUANGZHOU, China - Oct. 16, 2013 - PRLog -- According to Biomaterials China News (http://www.cnchemicals.com/ResearchCenter/Newsletter/245/Biomaterials-China-News-1310/2995) which was issued by CCM in October, the domestic ex-works price of propylene oxide (PO), a raw material of polypropylene carbonate (PPC), has been rising since early May 2013. The price has increased from USD1,880.1/t in early May 2013 to USD2,115.1/t in late Sept. 2013, up by approximately 12.5%. There are three main factors behind the price uptrend of PO in May-Sept. 2013.

Firstly, many PO enterprises undertook equipment maintenance of their PO production facilities during April-June 2013, which led to the tight supply during this period and thus causing an increase in the domestic PO price. In China, due to the highly concentrated production capacity in the domestic PO industry (the capacity of top six PO enterprises accounted for 75.7% of China's total in 2012), the market supply of PO is reduced significantly when the major enterprises are undertaking equipment maintenance.

Secondly, the domestic price of the raw materials for PO witnessed an increase in July-Sept. 2013, which provided support for the domestic PO price. According to related statistics, the producer prices of propylene in East China and liquid chlorine in China have increased by 11.0% and 25.4% respectively from July 2013 to Sept. 2013. Propylene and liquid chlorine are two main raw materials of PO.

Thirdly, the increasing market demand from downstream industries also drove up the PO price from July 2013. Along with the PPC industry, domestic PO is also consumed in the polyether polyol (PPG) industry, which accounts for approximately 75% of the total PO consumption. According to Wang Hongke, a salesman of Befar Group Co., Ltd. (a leading PO supplier in China), Sept. and Oct. coincide with the peak consumption season for PPG every year, which helped to boost the demand for PO and in turn drove up the domestic PO price.

However, the increasing price of PO has had little effect on the domestic PPC price, despite PO accounting for 60%-70% of the total production cost of PPC resin. According to CCM's price monitoring, the average ex-works price of PPC from the major domestic manufacturers increased slightly from USD4,520/t in May 2013 to USD4,560/t in Sept. 2013, only up 0.9%.

The inability of PPC manufacturers to raise the price of PPC is the key factor behind its relatively stable price. Mr. Zhao, Sales Manager of Nanyang Zhongju Tianguan Low Carbon Technology Co., Ltd. (the largest PPC producer in China with a capacity of 22,500t/a), observed that PPC manufacturers may lose customers if they raise the PPC price in view of the currently small domestic PPC market. This is because PPC is very expensive compared with traditional plastics such as low density polyethylene (LDPE, currently priced at     USD2,025.9/t) or polypropylene (PP, currently at USD1,855.8/t). Even biodegradable plastics such as PLA, which is currently priced at USD4,401/t, are more cost competitive than PPC.

In summary, the increasing PO price has brought great cost pressure to domestic PPC enterprises, and their profit will be reduced. PPC producers should pay more attention to the downstream products. PPC producers can take actions to improve the competitiveness of PPC in the plastics marketplace, such as improving the comprehensive properties of PPC resin such as its solvent resistance and oxygen insulation in order to expand the scope of application of PPC.

Table of Contents of Biomaterials China News 1310 (http://www.cnchemicals.com/ResearchCenter/Newsletter/245/...):

Enterprises in the bioplastic packaging industry make significant breakthroughs

China's PO price has been increasing from early May 2013

Three companies plan to develop bio-based polyhydric alcohol

Hubei Guanghe successfully produces biological plastics

China's enterprises actively establish new biological PDO programs in 2013

China's corn price decreases slightly from Aug. 2013

China's PLA import volume decreases in Aug. 2013

China's import volume of dry cassava decreases in Aug. 2013

China's import volume of castor oil and its derivatives decreases in Aug. 2013

Guinea-Bissau imposes ban on use of plastic bags in commodity trade

A Dutch teenager invents a garbage collection device

5.6 billion paper packages of milk beverage recycled in China in H1 2013

Doctors in Zhongshan Hospital implant degradable stents

Three companies to establish a new biotech company

Biomaterials China News, with 12 to 14 topics in one issue, published by CCM on 8^th every month, will bring you the latest information on the market dynamics, company dynamics, new biomaterials products, new biomaterials technology development, new legislations as well as policies and raw material supply dynamics, which are shaping the significant market intelligence of the industry.

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