Page 136 - CW E-Magazine (12-11-2024)

Point of View

PC/acrylonitrile-butadiene-styrene (ABS) alloys combine the greater heat resistance of PC with the processibility of ABS and are used
mainly in housings for office machines.

Global markets suffer from overbuild
Global capacity for PC is currently around 6.5-mtpa and is forecast to grow at a rate of ~6% per annum to 2030. Production is
concentrated in Asia Pacific, Western Europe and North America, and amongst a limited numbers of participants. The Top-10 producers
collectively accounted for ~75% of global capacity in 2022, with the Top-2 (Covestro and SABIC Innovative Plastics) contributing~40%.
As seen in several value chains, recent capacity builds have been mainly in North-East Asia, particularly China and South Korea, and in
the coming years much of it will be in China. According to some estimates, a whopping 2.0-mtpa of new PC capacity could come up in
Asia between 2024 and 2028, with close to 90% of this in China. There is also a trend to integration in China to the key raw material –
BPA – either in the project conceptualisation stage, or as an afterthought.
An interesting aspect of the PC business is that it fits neatly into the phenol/acetone value chain. BPA manufacture needs both
chemicals (though not in the ratio in which they are produced in the classical cumene-to-phenol/acetone route). Though there are several
PC producers who are integrated all the way to phenol/acetone, there are several who are not.

Global PC demand in 2023 was~5.1-mt, well below the installed capacity. Electricals & electronics and the construction industries
accounted for about 22% each, while the automotive sector chipped in with 16% share.

Transition to a commodity
In the last decade, PC has transitioned from a speciality polymer to a commodity, akin to the transition seen earlier in polyethylene
terephthalate (PET)whose market size now exceeds that of general-purpose polystyrene. Though the volumes of PC produced pale
in comparison to the commodity polyolefins, and production is still concentrated,new supply has changed the market dynamics and
putting increasing pressure on margins. Speciality resins thrive on performance with low-volume end-use segments willing to pay a
higher price, and increasingly this is becoming a challenge. With enhanced availability of PC resin – especially from China where capa-
city stood at 2.8-mtpa in 2022, well in excess of local demand – purchasers are shifting from marquee trademark names to price-driven
considerations – the hallmark of a commodity.

This is forcing rethinking in business strategies, and restructuring in the global PC business, with producers in Europe most active. In
March this year, Trinseo, a mid-sized producer, announced closure of its virgin PC production site in Stade, Germany, thanks to a perfect
storm of high costs, falling demand and surging imports from low-cost producers from outside of the region.
The leading producers have also shifted their focus to strengthening differentiated business and moving away from selling standard
PC grades. In 2010, only 35% of PC sales (by volume) at Covestro came from differentiated products, but by 2021 this share had risen
to 73%, with an aim to reach 80% by 2025.

It is likely that the global PC market will split – with high-end markets left to a handful of suppliers, and the rest of the market a battle
for market share amongst tens of others. Another differentiator – offered as of now in small quantities – are partially bio-based grades
of PC, as well as recycled PC obtained through dissolution technologies.
Indian market
India has no producer of PC resin though compounding capacity exists, including by Covestro. Local demand is currently met through
imports, which have risen from in 217-kt FY22 to 224-kt in FY23 and to 280-kt in FY24. In addition, there is imports of ‘contained PC’ in
the form of finished products. While the overall market here is still small in the context of demand in other countries, it is sufficient to
support one or more resin plants. Globally, these vary in size – from 50-500 ktpa – and several are sized around 200-ktpa.

In January 2024, Deepak Chem Tech, a wholly-owned subsidiary of Deepak Nitrite Ltd., announced plans to enter the business of
PC resin. While no details of capacity for PC resin have been revealed, the company has begun serving customers with locally-made
PC compounds based on imported resin and said it will gradually scale up capacity for PC compounds to about 30-ktpa. An earlier
announcement of plans to make BPA, downstream of its existing phenol/acetone business (which is to see a substantial expansion),
points to an integrated play aiming to capture value across the phenol/acetone-BPA-PC-Compounds value chain.
While this is a sound strategy, the spoiler can come from the surfeit of the polymer in the region and beyond!
Ravi Raghavan

136 Chemical Weekly November 5, 2024

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