The Asian Polycarbonate (PC) market witnessed a noticeable decline by 0.5% during the second half of October, with it being contributed by slack demand, falling raw material prices, and conditions of oversupply. The Chinese domestic PC market fell into stagflation and correction, and spot PC prices of some brands eased off. Up to the 16th of October, the mixed benchmark price of a marginal change since the beginning of October.
Chinese PC production in the first week of October stayed flat at a running rate of about 81%. While the load has been flat, pre-maintenance announcements by major producers like Pingmei Shenma, Lihua Yiweiyuan, Jiaxing Teiren, and Luxi Huoao have induced cautious hopefulness. The PC market has actually priced in the impact of the pre-announcement of the maintenance and now the market is expecting the reality of these plans. Inventory positions are still elevated, and PC supply is ahead of demand. That oversold state with minimal trading has capped price appreciation.
The PC support price has eased significantly after a steep price drop in bisphenol A. Upstream phenol and acetone markets also suffered heavy losses, dragging down bisphenol A further. Consumption of bisphenol A has also been poor, compelling sellers to reduce prices to prompt orders. The PC market sentiment is downcast, and prices will fall further as companies look for a new equilibrium level. This fall in raw materials is weakening the cost base for PC, and this accounts for the overall price drop.
October is normally peak season for PC demand, but this year's "Golden Ten" has been a letdown. Downstream mills operated at low rates of utilization for the time being, and pre-holiday inventory stockpiling was manageable. Post-holiday digestion of inventory has been weak, and trading activity slowed down. While early maintenance announcements had briefly pushed spot prices up, the influence turned out to be transitory. Merchants are rather focused on selling through and recouping capital, and this has led to overall profit-taking and price stickiness. Strong social inventory and end-user opposition to higher prices have also tempered market momentum.
As per ChemAnalyst, with soft demand, reducing raw material prices, and over-supply, the Asian PC market is expected to be under strain soon. While future maintenance will attempt to bond them out partly, sentiment is indicative of a consolidation phase and not a bounce-back. Both manufacturers and traders are gearing up for prolonged price weakness as the market attempts to stabilize.
