PC Market Price May Decline After Edging up in H2, 2024
China’s PC market prices mainly fluctuated within a narrow range in H1, 2024. From January to June 2024, the PC price of Lotte Chemical 1100 averaged RMB 15,085/mt in the Yuyao market, down 3.03% Y-O-Y. The mid-January saw the lowest price of RMB 14,300/mt. At the beginning of the year, the market lacked sufficient favorable factors, with the price mainly fluctuating at lows. Afterward, the market began to fluctuate upwards amid some short-term supportive factors like notable feedstock price rises and bullish sentiments, and the price climbed to RMB 16,000/mt or so in early May, the highest level in H1 and up 11.89% from the lowest.
Both PC supply and demand increased, but supply-demand imbalance still existed.
In H1, 2024, China’s PC output rose notably. For one thing, with the startup of the 260kt/a unit at Hengli Petrochemical, China’s PC capacity reached 3,690kt/a, up 7.58% from 2023. For another, the monthly industrial operating rate remained at a high level of no less than 70%. From January to June, the monthly average output was 237.8kt, up 18.33% Y-O-Y. Meanwhile, the growing Chinese-made resources also led to a decline in the import volume of PC. From January to May, the import volume totaled 364.9kt, down 18.23% Y-O-Y. In H1, 2024, China’s total PC supply volume was estimated at 1,861.5kt, up 7.40% Y-O-Y.
China’s PC market demand improved somewhat this year. In H1, 2024, the apparent consumption volume of PC was predicted at 1,632.3kt, up 6.68% Y-O-Y, but the growth rate was 1.78 percentage points lower than that of total PC supply volume, indicating that the supply-demand pressure still existed. The PC export market performed well in H1, 2024, with some producers active in seeking export destinations. From January to May 2024, China’s PC export volume accumulated at 186.6kt, up 20.42% Y-O-Y.
In H1, 2024, the PC consumption was still concentrated in traditional downstream fields. Among them, the automobile industry performed well, from January to May, the production and sales of conventional energy vehicles increased by 6.5% and 8.3% Y-O-Y, and those of new energy vehicles rose by 30.7% and 32.5% Y-O-Y. The export of vehicles also climbed by 31.3% Y-O-Y. In the field of electronics, according to NBS, from January to May, the output of complete electronic computers, microcomputers and mobile phones rose by 2.6%, 1.9% and 10.6% Y-O-Y respectively. These factors all boosted PC consumption.
Feedstock BPA price fluctuation decelerated, exerting limited influences on the PC market.
In H1, 2024, China’s BPA market price fluctuation slowed down with a narrower range. On the one hand, the domestic BPA output increased by a large margin, following the gradual stable operation of some newly added units, but BPA demand growth was limited, so the oversupply pressured BPA prices. On the other hand, the profit from producing BPA remained negative for a long time due to high cost, so the price downside potential was not large. From January to June 2024, the price spread between PC (Lotte Chemical 1100) and BPA was RMB 4,825-5,900/mt, with an amplitude of 22.28%, which was narrower Y-O-Y.
Forecast: In H2, 2024, China’s PC market prices may rise first and then drop, but the price fluctuation range may be limited.
According to SCI’s monitoring, PC prices have shown some seasonal characteristics. In Q1, the price has a certain extent of possibility of rising, as downstream plants will resume production successively after the Spring Festival holiday, improving PC demand. In Q2, the market enters the traditional consumption slack season, so the possibility of a price rise is small. In Q3, downstream plants stock up in advance for the upcoming peak season, which usually pushes up the price. In Q4, with market demand weakening gradually, the price generally fluctuates downwards.
H2, 2024 China Proposed Newly Added PC Units
In H2, 2024, it is predicted that China’s PC market prices may fall after rising, but the price fluctuation range may be limited. For Q3, on the supply side, the units at Wanhua Chemical are scheduled to take maintenance, and the capacity of these units is about 13.55% of the total. Although the maintenance plan has been released in advance, it is still needed to pay attention to the influence on market mentality. On the demand side, with the traditional peak season, “Golden September and Silver October”, upcoming, market demand is expected to increase moderately. In addition, China has issued related policies and programs to stimulate consumption. For example, the Ministry of Finance issued a notice on the budget of the central government’s advance allocation of funds for automobile trade-in in 2024. It is needed to pay attention to the influence of the implementation of related policies on market mentality. On the cost side, feedstock BPA prices may fluctuate at highs, still providing cost support. Therefore, the PC price is likely to rise in Q3, but the supply-demand imbalance may still exist, curbing the upside potential of the price. For Q4, some newly added capacity is expected to be released, increasing PC supply. However, market demand may weaken gradually, so the PC price may drop somewhat. According to the price seasonality, the highest price may occur in September or October, while the lowest, in July or December.
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