CCM: Decreasing prices of PTFE lead to underwhelming profits, 2016

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Publish time: 16th January, 2017      Source: CCM
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  The profits of China's PTFE manufacturers in 2016 were decreasing significantly, compared to the year before. The main reason is a strong competition together with resulting decreasing prices, according to CCM. If manufacturers are not changing their strategy, a withdraw of some producers from the market is likely to happen.

  

   

  Source: Baidu

  

  Even, the price of PTFE was strongly lifted by the Chinese manufacturers in December 2016, the overall price development in 2016 declined in comparison to 2015. The declining prices, mainly due to a stronger competition in this market, led to decreasing profits of many manufacturers, which some of even endured losses in this period.

   

  The price rise in December followed the monthly meeting of China's PTFE industry. Prices rose up by up to USD580/t. The increase was mainly backed up by a higher demand of traders and distributors, as well as a short supply of PTFE.

   

  According to CCM, the short supply was caused mainly by production limitations due to environmental protection efforts of China's government and more profitable fluoride than PTFE, like HFP, which caused several manufacturers to focus their raw materials and production on the much more profitable products.

   

  The environmental protection is becoming stronger in China because several cities and area in China have shown significant pollution in 2016 with water and air quality highly under the aimed value. According to researches of the Orebro University, China is the biggest emitter of toxic fluorinated chemicals, that are partly arise from the manufacturing of PTFE. The group of chemicals is harmful to animals and humans.

   

  Looking at the whole year of 2016, the price fluctuation was quite similar to the one in 2015, but on a lower level in general. In fact, the ex-works prices of PTFE dispersion resin and PTFE medium size particle resin both went down by 8.71% and 2.75% year on year in November 2016. The overall peak season for both years has been from March to June.

  

   

  

  CCM explains the decline of profits with the strong competition in the PTFE market in 2016. Many rising costs in the production of PTFE, like higher prices of coal and the increase in transportation costs, have also reduced the profits of manufacturers. The average profit went down by about USD58/t as a result of this indicators.

   

  Furthermore, a huge amount of PTFE manufacturers obtains their raw materials completely from extern sources, which is the main reason for the high production costs of this product. If those producers are not changing their strategy in the long term, a shut-down of several manufacturers, facing lower profits and even losses, is likely to happen in the future.

   

  What's more, the Asia Pacific region as well as North America are considered to be the main actors in the global micronized PTFE market. In these areas, the USA and China are the leading markets, for this product. The strong demand is resulting out of the large domestic ink, coating, thermoplastic, and elastomer industries.

   

  About CCM:

   

  CCM is the leading market intelligence provider for China's agriculture, chemicals, food & ingredients and life science markets.

   

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