[Industry Focus]：Bisphenol A market analysis: domestic supply surplus, how to break the industry?

In the first quarter of 2024, the domestic bisphenol A market entered a new stage of development. The further expansion of domestic supply and the mismatch between market demand have led to a continued decline in product prices and increased industry losses. At the same time, imports shrank sharply, while exports showed significant growth.

In the first quarter, the domestic bisphenol A market ushered in the commissioning of two new units, located in Qingdao Bay and Hengli Petrochemical, each with an annual production capacity of 240000 tons. This brings the total production capacity of bisphenol A to 5.355 million tons, and the domestic supply capacity has been further improved. However, compared with the growth of supply, market demand has not increased simultaneously, resulting in the contradiction of oversupply becoming more and more prominent. According to statistics, the total output of bisphenol A in the first quarter was about 998000 tons. Although it increased month-on-month and year-on-year, the capacity utilization rate dropped by 7.4 percentage points year-on-year to 70.1 percent.

Fig.1 Comparison of domestic production of bisphenol A in China from 2022 to 2024

in terms of downstream demand, the two main downstream performance of bisphenol A is different. The PC industry has benefited from the lower price of raw material bisphenol A and the promotion of domestic demand, and its output has increased significantly. The epoxy resin industry is due to the decline in raw material prices, slow follow-up of demand and high industry inventory and other factors, resulting in low capacity utilization. Therefore, even taking into account the import and export impact of bisphenol A and year-end inventory, there is still a significant gap between domestic production and downstream demand in the first quarter.

Table 1 Supply and demand of bisphenol A in the first quarter of 2024

unit: ten thousand tons

affected by the imbalance between supply and demand, the overall market price of bisphenol A in the first quarter showed a downward trend. The quarterly average price decreased from the previous quarter and the same period last year. The price range of the mainstream market in East China is also relatively narrow, and the amplitude of high and low ends has narrowed compared with the same period last year. The main reasons for the downward price of bisphenol A include the increase in domestic supply, the release of new capacity, the intensification of market competition and the lower-than-expected economic recovery. Under the combined effect of these factors, the overall market mentality is weak, and the price difference between regions is also widening.

East China Bisphenol A Market Trend, 2022-2024

corresponding to the downward trend of market prices, the losses of bisphenol A industry are also increasing. The average gross profit of bisphenol A in the first quarter was negative, and the loss increased compared with the previous quarter and the same period last year. This is mainly due to the lower price of bisphenol A and the relatively high cost of raw materials. In particular, the strong performance of pure benzene prices, making the cost of phenol ketone under greater pressure. In this case, the cost pressure of bisphenol A industry is obvious, and the loss is increasing.

Changes in the gross profit of bisphenol A industry costs in the first quarter of 2024

unit: Yuan/ton

with the expansion of domestic production capacity and the increase of supply of bisphenol A, its substitution effect on imports gradually appears. In the first quarter, the import volume of bisphenol A dropped sharply, while the export volume showed a significant increase. The main export direction is near-ocean Southeast Asia, with Thailand accounting for the highest proportion of exports. This change shows that the domestic bisphenol A market is gradually moving towards internationalization, and exports have become an important way to alleviate the contradiction between domestic supply and demand.

Changes in the import and export of bisphenol A from January to February 2024

unit: ton

entering the second quarter, the domestic bisphenol A market will still face the situation that the supply and demand pattern is difficult to change. Although some units have maintenance plans, there are still new units planned to be put into production, and domestic supply will remain adequate. At the same time, due to the advantages of China's bisphenol A prices relative to imports, it is expected that subsequent imports will continue to shrink, while the trend of export growth will continue. In this context, bisphenol A market prices or will still face downward pressure, industry losses may be difficult to improve.

In the first quarter of 2024, the domestic bisphenol A market showed the characteristics of supply and demand imbalance, price decline, industry losses and changes in the import and export pattern. Looking ahead to the second quarter, the market will still face many challenges and uncertainties. Therefore, relevant companies and investors need to pay close attention to market dynamics and formulate reasonable production and business strategies to respond to market changes.