The tight market for polycarbonate resins during the past 18-24 months finally is easing, as new production capacity is letting PC suppliers catch up with demand. Lead times for deliveries have shortened to 10-12 weeks - half of what they were a year ago, and may return to ``normal'' levels of four to six weeks by the end of the third quarter, Charles Crew, vice president and general manager for commercial operations for GE Plastics of Pittsfield, Mass., said in a May 7 telephone interview. Crew said GE's increased capacity helped it improve its first-quarter delivery record.
Also, he said the new capacity is allowing GE Plastics to turn its attention toward developing new business. In the past 18 months, the company concentrated solely on producing all the resin it could and racing to get the material to its customers.
Crew acknowledged that PC's meager supply during the past two years has caused users to consider and use other materials, but, he said, that will change with recent investments made by producers.
``The investments we are making in Lexan production will give us the appropriate capacity to use it as a substitute for other materials, such as aluminum, steel and glass,'' he said.
GE Plastics' investments include expansions at its production facilities in Mount Vernon, Ind.; Burkville, Ala.; and Bergen-op-Zoom, the Netherlands. Also, a new plant is under construction in Cartagena, Spain.
The Spanish plant is to go into production in 1998, with the capacity to produce 60 million pounds of PC a year.
The expansions are boosting GE Plastics' production by 46 percent - to 1.2 billion pounds a year - by the end of this year. Further, GE plans to add another 50 million pounds of capacity in Europe in 1997, just before bringing on the new plant in Spain. GE is the world's leading PC producer.
Meanwhile, Bayer Corp. of Pittsburgh, the second-largest producer, increased its production capacity by nearly 70 percent, and Dow Chemical Co. of Midland, Mich., boosted its production by nearly 50 percent in 1995.
Bayer and Dow executives could not be reached for comment last week.
However, three PC buyers said last week they have seen strong evidence that the expansions are being fruitful, providing more resin to the market and easing tight supplies. The buyers also said they saw the short labor strike at General Motors Corp. in April as helping to flatten demand, and give PC producers a chance to catch up.
While the buyers hoped that the easing of tightness might lead to lower prices, Crew said he does not now foresee that possibility.
``What we are seeing is that customers are relaxing. We saw very high demand, and we saw customers concerned about supply, so they inflated demand for the resins. That was a reaction to the tightness in supply,'' he said.
``Demand is still very strong, but with the investments being made we are seeing more resins on the market and the tightness should end by the end of the third quarter,'' Crew said.
He expects markets to return to conditions that could be considered normal by that time.
However, he added, ``We don't expect to see a drop-off in prices. Raw materials - phenol and cumene - are still in a volatile condition.
``I don't expect any dramatic price increases, no run up in prices, but I think we will have a flattening of prices, not declines,'' Crew said.
Crew said demand for PC continues to be strong from the automotive, computer and business equipment, electrical and electronics, and telecommunications markets.
For the future, the GE executive believes the current expansions will provide sufficient quantities of resins to meet demand and - with the addition of new capacity in Spain in 1998 and at other sites - supply may exceed demand.
``We now have a much more stable environment from the supply side,'' Crew said.
In commenting on the previous instability in the market, Crew noted that GE Plastics missed making on-time deliveries to its customers 30 percent of the time in 1995. In the first quarter of this year, Crew said GE Plastics delivered 92 percent of its orders on time, and is continuing to improve that record.