Supply at Low Levels, PC Prices Remain Firm in May in China

June 1st news

Price Trend

According to Spotcom data, the Chinese PC market trend showed a narrow fluctuation in May, with spot prices for various grades rising and falling. As of May 31, the benchmark price for PC blends was around 16,166.67 CNY/ton, a decrease of 1.02% from the beginning of the month.

Cause Analysis

Supply Side: During May, the operating rates of China's PC polymerization enterprises decreased from already low levels. Maintenance plans for companies such as Shanghai Mitsubishi and Zhejiang Petrochemical were successively carried out, reducing the industry's operating load to around 63%, a new low for the year. The loss in production continued to expand, with the current weekly output falling below 55,000 tons. Polymer plants are experiencing no significant pressure on shipments and have a strong intention to maintain prices. Overall, the supply side is providing increasingly strong support for PC.

Regarding Raw Materials: As shown in the chart above, since entering May, China’s bisphenol A market first experienced fluctuations and then began to decline. International crude oil prices underwent sharp volatility, rebounding briefly before plunging again. Negative factors rippled down to acetone and phenol, dragging both markets downward to varying degrees. On the other hand, supply of bisphenol A remained relatively stable, while demand continued to weaken. Merchants have been actively selling their inventories, and in trading practices, they’ve tended to lower prices and prioritize securing orders. Within this price range, the trend initially stabilized before turning downward, overall weakening the support for PC costs.

Demand Side: Sales at downstream PC factories are gradually entering the off-season, leading to a softening in demand for products such as board and shell casings. End-user enterprises are operating at low capacity utilization levels. Currently, PC prices remain high, prompting cautious inventory-building behavior among buyers. There is little willingness to establish new positions, and the market atmosphere is heavily characterized by wait-and-see attitudes. Supply liquidity is relatively sluggish, and traders’ sentiment is weak; price quotations are following market trends, with increased instances of offering discounts to secure orders. Low-priced supplies on the market still need to be absorbed, exerting downward pressure on polymer manufacturers’ pricing benchmarks. Overall, the demand side is providing weak support for PC spot prices.

Future Market Prediction

In May, the Chinese PC market maintained a consolidation trend. The price of upstream bisphenol A softened at the end of the month, weakening the cost support for PC. The operating rates of Chinese PC polymerization plants were low. Trading in the market was mainly driven by weak rigid demand, with buyers being cautious and purchasing on a need-to-use basis, resulting in mostly small orders. Currently, both supply and demand for PC are weak, and the market direction is unclear. It is expected that the consolidation trend will continue in the short term.

Technical Analysis

Analysts believe that according to the spot market data, the PC moving average in May showed a tangled trend, with three crossover occurrences within the range. The last crossover happened on the 22nd, when the 10-day moving average crossed above the 20-day moving average. Auxiliary indicators show that the PC price is at a recent mid-level and a higher or mid-high level compared to previous days. The difference between the moving averages shows a fluctuating trend, indicating that it is currently in a high-level consolidation phase, with significant resistance to spot price increases. It is recommended to closely monitor the fundamental situation of PC for future market trends.