Policy outlook for the polycarbonate (PC) industry

1. Commission Regulation (EU) 2018/213, published on 14 February 2018, sets requirements for bisphenol A in food-contact varnishes and coatings, amends the BPA limit in Regulation (EU) No 10/2011 and introduces a declaration of compliance. It entered into force on 6 September 2018.

The specific migration limit for BPA in food-contact plastics fell from 0.6 mg/kg to 0.05 mg/kg, a twelvefold reduction. Because of the potential effects of BPA on humans, especially infants, its use as the main PC raw material is being restricted ever more tightly, which affects PC in food containers and baby bottles. PC baby bottle production and use in China have fallen sharply in recent years.

2. The National Development and Reform Commission's Catalogue for Guiding Industry Structure Adjustment (2011 version, revised 2013), effective 1 May 2013, lists non-phosgene polycarbonate plants of 60,000 t/y and above as 'encouraged'. Before 2014 China's PC capacity was far short of demand and import dependence exceeded 80%; to meet demand and reduce reliance on imports, such plants were encouraged. In 2015 Zhejiang Tieda-Feng produced China's first state-owned 100,000 t/y non-phosgene PC plant. In the following years Luxi Chemical, Wanhua Chemical and Lihuayi Weiyuan started up plants; by the end of 2018 China's PC capacity reached 1.26 million t/y, up 147% on 2014, with non-phosgene capacity above 18%.

3. The 2019 draft catalogue (consultation version), published on 8 April 2019, revises the 2011 catalogue and divides industries into encouraged, restricted and eliminated. Non-phosgene PC plants of 60,000 t/y and above are no longer listed as encouraged.

2018 was the year Chinese PC capacity was released in bulk: 385,000 t/y was added, up 44%, and many companies announced expansions. By 2021 planned projects should be largely complete, taking national capacity close to 4 million t/y. Such rapid supply growth will hit the industry hard: against apparent consumption growth of only 2.4% in 2017, the imbalance may bring serious oversupply in the coming years. The China Petroleum and Chemical Industry Federation's 2018 capacity warning report therefore flagged PC for the first time among 28 monitored products.

The adjusted catalogue should better guide investment, reduce blind capital flows and overcapacity, and support supply-side reform and the healthy development of China's PC industry. As of 2019 some previously announced PC projects have been halted, which helps avoid waste of capital and capacity.

4. The Catalogue of Industries Encouraging Foreign Investment (2019 edition), issued by the NDRC and MOFCOM on 30 June 2019 and effective 30 July 2019, again lists 'non-phosgene polycarbonate (PC) of 60,000 t/y and above' as encouraged.

Because core technology remains hard to master, most PC made by newcomers in China is low-end and highly homogeneous, so competition there will intensify while high-end grades are still imported. Listing non-phosgene PC as encouraged for foreign investment should steer investment toward mid- and high-end products, raise localization and reduce import dependence.