China PC Market Price Review and Forecast

China PC Market Price Review and Forecast

Chart 1 2014-2018 China PC Market Price

From 2014 to 2018, China’s PC market saw relatively stable operation as well as ups and downs. From 2014 to 2016, the PC market fluctuated within a small range. On the one hand, feedstock prices hovered at high levels for a long time, resulting in high production cost. On the other hand, China’s PC capacity expanded notably, thus the market competition was fierce. By virtue of the policy guidance and price decrease in feedstock, the profitability of PC industry climbed rapidly. In 2017, bolstered by tight supply, China’s PC market soared to a 10-year high. Thus, in 2018, China’s PC market was under pressure of high market price, high gross profit and high capacity growth rate.

Chart 2 2018 China PC Market Price

In 2017, China’s PC market surged to a high level. Affected by increasing new PC capacity in 2018, market participants adopted a bearish sentiment. In 2018, the PC supply-demand imbalance was obvious, and PC market prices mainly fell back.

In Q1, as the supply increased in early 2018 and the demand was slack with the Spring Festival holiday near, China’s PC market obviously fell back from a high level. The operating rate of the PC units in Asia was expected to ramp up, and the support from the USD market was not obvious. After the Spring Festival holiday, the demand for PC resumed at a slow pace, and the PC market was relatively stable. The demand was limited till March. In Q1, the PC market price decreased by 6%-6.5%.

In Q2, the PC units in Asia were scheduled to take turnarounds from April to July. Besides, affected by the import prohibition of industrial waste plastics and the Sino-U.S. trade spat, the PC market first rallied and then fell. In early Q2, participants adopted a bullish sentiment to the market, and the trading atmosphere was active gradually. With the unit maintenance intensifying in May, the PC market price was stable-to-rising. Yet, downstream users showed decreasing ability for purchasing, thus the active trading atmosphere cooled down. With the maintenance season drawing to a close, market participants lacked confidence in the market, and the PC market price crashed by 4%-6.3%.

In Q3, China’s PC market prices decreased to RMB 20,000/mt. As seen from the supply, two PC units with 130kt/a at Lihuayi Weiyuan Chemical went into production in succession. The phase II unit at LUXI Chemical was tested run actively. As seen from the demand, Sino-U.S. trade spat curbed participants’ sentiment. The supply-demand imbalance will be more obvious. In September, market participants adopted a cautious sentiment. Traders still suffered sales pressure. In Q3, PC prices decreased by 12.9%-14.6%.

In Q4, China’s PC market first slumped and then rebounded slightly. In November, China’s PC enterprises cut the PC ex-works price sharply. In late November, PC price of some brands once decreased by 21.9%. Participants lacked confidence in the market, and the PC inventory was extremely low. PC enterprises were reluctant to stock up. In early December, international PC conferences were concentrated, and favorable news was released frequently. The trading atmosphere warmed up gradually. End users were active in purchasing. The dealing price of low-end resources rapidly surged by 8.7%. In Q4, the PC market price decreased by 13.6%-17.8% overall.

Forecast:

Chart 3 2019 China PC Market Price Forecast

China’s PC capacity will continue increasing in 2019, and this will bring fiercer market competition. The global economy and China’s industrial policies will give the PC market both opportunities and challenges. China’s PC import dependence degree remains at a high level, so China is carrying out some policies to encourage the production and consumption of PC.

As for the capacity, attention should be paid to the commissioning process of newly added PC units. It is expected that the capacity growth rate of PC will be 23.8% in 2019. The commissioning time of PC units is mainly in Q3, and the approved projects are distributed in East China, Central China and Southwest China.

As for the feedstock BPA, there will be PC projects to be put into production in H1, 2019, so the demand for BPA may increase, supporting the BPA market. In H2, 2019, there will be new BPA projects at Changchun Chemical and Lihuayi Weiyuan Chemical, so the supply will increase. Thus, the BPA price may decrease from highs.

As for the demand, attention should be paid more to the development of new energy automobile, charging pile and medical markets. What can’t be ignored is the Sino-U.S. trade as the imposed tax will trigger the changes in global trade flows and the adjustment of industrial supply and demand pattern. The PC tax rebate increasing to 16% will further enlarge the market sales channel and improve market competitiveness.

Overall, in 2019, the increasing PC capacity, strong co-movement with the cost and slow demand growth will continue to weigh on China’s PC market. It is expected that China’s PC price may hover at RMB 15,000-20,000/mt in 2019.

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