Introduction: The collapse in costs, combined with weak demand, has triggered a sharp decline in China's bisphenol A (BPA) market recently. A significant drop in the price of the raw material phenol, coupled with sluggish downstream follow-through, has jointly weakened market support at the bottom. Some upstream companies, facing increasing inventory pressure, are offering concessions to move product, further accelerating the price downturn. As of press time, the reference price for BPA in East China is 9,750 yuan/mt, down 14% from the beginning of April.

Recent purchasing intentions at downstream terminal factories for phenol have become a dominant influencing factor. Poor sales channels for holders have forced them to offer concessions, dragging the market into a downtrend. However, BPA faces a triple whammy of negative factors from costs, supply, and demand, widening the scope of the price decline. Consequently, the price spread between BPA and phenol has narrowed from 2,000 yuan/mt in early April to 1,400 yuan/mt.

The BPA operating rate trend in April showed an initial increase followed by a decline. Affected by sharply squeezed BPA profits and inventory pressure, a few companies have already reduced their operating loads. Coupled with scheduled melt processes and planned maintenance shutdowns at other facilities, the BPA industry operating rate has fallen to below 70%. Currently, companies reducing loads or undergoing shutdowns include: Covestro in its maintenance period, Sinopec Zhenhai Refining & Chemical and Longjiang Chemical entering the melt process, and Cangzhou Dahua running at 70% capacity. Although the BPA operating rate has decreased, social inventories remain difficult to consume, and supply is still ample.

In April, operating rates for BPA's major downstream sectors generally declined, with a particularly significant decrease in PC, leading to a substantial reduction in BPA consumption. Meanwhile, new orders for epoxy resin downstream performed poorly, and external procurement plans for both major downstream sectors decreased concurrently. Although BPA's own production volume has decreased, the decline is less than the contraction in demand, causing the supply-demand gap to widen continuously. This, in turn, forces upstream producers to face inventory build-up and rising pressure from warehouse capacity constraints.

In the near term, the decline in the BPA market is gradually slowing down, and the possibility of bottoming out and halting the decline cannot be ruled out. Key areas to watch include the following:

1. Supply Side: BPA's overall production volume is expected to see little change in the short term, with some companies still holding high inventory levels. However, as costs gradually increase, the room for companies to offer price concessions has become quite limited.
2. Demand Side: The output of downstream epoxy resin and PC is expected to recover. Approaching the May Day holiday, there may be restocking demand downstream. However, due to persistently weak BPA prices, downstream purchasing attitudes are cautious, and the overall restocking intensity is expected to be limited.
3. Cost Side: The prices of raw materials phenol and acetone are trending upward, providing strong cost support for BPA.
4. Sentiment: Considering BPA costs, downstream cost structures, and restocking pace, bearish market sentiment has somewhat eased, and the scope for further BPA price declines is gradually narrowing.