Market Review
In H1, 2020, influenced by the public health event, China’s PC market moved sideways. Before the Spring Festival holiday, the PC market tended to go up. However, after the outbreak of the public health event, the fundamentals were seriously unbalanced, and the PC market prices decreased to the lowest. In Q2, as producers resumed working gradually, downstream producers showed strong intention to stock up. Thus, the PC prices rebounded greatly.
In January, market players paid more attention to the low-end PC materials market, negative profits, external environment, unit maintenance, etc. The BPA units were shut down for maintenance, and the demand was fairish, driving up the prices quickly. The cost of PC increased obviously, and low-end PC materials suffered a profit of RMB 1,300/mt, and middle PC materials suffered a profit of RMB 400-500/mt. Before the Spring Festival holiday, some market players stocked up moderately, and the prices of low-end PC materials increased.
However, after the Spring Festival holiday, China’s PC market sharply declined. Impacted by the public health event, the operating rate of China’s PC units decreased gradually, and that hit the historical low in end-February, less than 30%. There were no transactions, and the logistics transportation was not smooth in February. China’s PC market went down in H2 February. Entering March, as China’s enterprises resumed working, the operating rate at China’s PC producers increased to 55%-60%. However, China’s PC market still faced much pressure from the decreasing crude oil price, decreasing cost and turbulent finance market. Besides, the global public health event escalated, and the export market performed weakly. Thus, the PC market quickened the downtrend.
In Q2, supported by the cost and marketing hype, China’s PC market showed an uptrend. At the beginning of April, the oil price and feedstock prices increased, driving up the low-end PC material market. Some producers controlled the products, and there was no low-price PC material in the market. In the middle of April, the feedstock markets went up quickly, and the prices of PC increased due to tight supply. Later, supported by the “One Helmet and One Belt” policy, imported PC prices surged, and domestic PC prices increased as well. From mid-June, China’s PC market began to decline again.
In H1, 2020, except the profits in March and April were positive, the profits in other months were negative. The average profit of middle PC material was RMB -566/mt, down 285.3% Y-O-Y.
Market Forecast
In H2, 2020, it is expected that the PC capacity will increase further. The 130kt/a phase II newly added capacity at Wanhua Chemical and the 260kt/a new project will be put into operation gradually. Attention should be paid to the process of newly added units at that time. As for the demand side, after the public health event, the global demand is not optimistic. In the latest World Economic Outlook report, the IMF stated that the global economic growth rate is expected to be -4.9% in 2020. As from the global resources circulation, China is still the major importer of PC. As from the cost side, China’s integration development is relatively slow. In such a climate, it is expected that the prices of PC will be RMB 12,000-15,500/mt.
