Polycarbonate: Cycles

Record margins in 2018, then a Chinese build-out

PC margins swing with the spread over BPA. Between 2016 and 2018 tight supply gave record margins for Covestro and others. China then built aggressively, from 5 plants to 17, and margins collapsed to near cash cost by 2023-2025, apart from a short 2021 spike when stay-at-home demand met freight disruption. The floor is the cash cost of non-integrated producers buying BPA; the ceiling is substitution to glass, PMMA or copolyesters.

Non-integrated producers need roughly $600-800/t over BPA to cover phosgene or DPC, conversion and a return (indicative). Current levels are behind paywalls; reports describe margins near cash cost in Asia in 2024-2025 (indicative).

Booms and busts

1. 2017-2018

   Demand from electronics and cars ran ahead of capacity. Covestro reported record earnings, driven by polycarbonates (indicative).

   Asian PC prices above $3,000/t at times (indicative)

2. 2021

   Stay-at-home electronics demand, freight disruption and the Texas winter storm lifted prices briefly.

   Asian PC around $3,500/t at the peak (indicative)

3. 2022-2025

   Chinese capacity reached 3.5 Mt/yr and exports doubled to about 500 kt/yr. SABIC closed two Cartagena lines and Trinseo exited Stade.

   Asian PC mostly about $1,700-2,100/t (indicative); BPA plants ran below 70% in China (BPA tile)

What drives the cycle

• Chinese capacity. China holds about 45% of capacity and has turned net exporter.
• Phenol, acetone and BPA prices. BPA is about three-quarters of cost.
• Electronics and car production. These two end uses take 55% of PC.
• BPA regulation. EU food-contact ban and endocrine concerns shrink some uses.

Metrics to track