PHOENIX (Jan. 31, 3 p.m. EST) — Polycarbonate producers are having trouble passing through the highest benzene prices since the 1991 Gulf War because of global overcapacity for PC and a slow economy, an industry analyst said during the Plastics News Executive Forum, held Jan. 26-29 in Phoenix.
Benzene is a key ingredient that influences pricing of PC resin, said Ben Smith, who covers phenolics and nylon raw materials for Chemical Market Associates Inc. of Houston. A year ago benzene sold for a rock-bottom 75 cents a gallon, but today it can fetch $1.90 a gallon in spot trading, he said.
The last time prices were that high, a man named Bush was in the White House preparing for war against Iraq.
But resin producers are not raising PC prices to match their skyrocketing costs, Smith said.
“Global overcapacity's a problem,” Smith said. “There's a lot of capacity here in the U.S., also in Europe. They're building very heavily in Asia.”
In a theme repeated throughout the 2003 Executive Forum, Smith said Asia, especially China, is having a major influence in PC. More of the resin is being produced in Asia to meet demand from some key PC products, especially compact discs, digital versatile discs and DVD-ROM.
In 2000 the optical disc market helped fuel PC price increases. “If you could make it, optical media could consume it,” Smith said. Projecting continued double-digit growth, PC makers also launched new production.
Then the economic slowdown hit. Facing global overcapacity, PC prices fell in 2001 and through much of 2002.
Smith said Taiwan and China have become the world's largest CD/DVD manufacturers in the world, creating a tremendous demand for PC. “They're actually stamping Christina Aguilera and all the other artists over there and bringing it into the U.S. The U.S. CD/DVD market is disappearing as we speak. It's just cheaper to bring it in.”
Excess global capacity probably will spur producers to close some older PC factories, Smith said.