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PC: Keep singing all the way up
2023/9/8
Since mid to late August, the polycarbonate (PC) market has been booming. As of now, the mainstream negotiation reference price for injection molding grade low-end materials in East China is 1400-17500 yuan (ton price, the same below), and the negotiation reference price for medium to high-end materials is 17300-17800 yuan, an increase of 900-1100 yuan compared to early August, and the market price has reached a new high since the second quarter. Industry insiders believe that the PC supply side continues to benefit the market, but the slow recovery in demand may drag down the short-term PC market.
Continuous tightening of supply
Jin Lianchuang analyst Zhou Dongchao introduced that in August, the domestic PC market demonstrated a "V-shaped" trend. Since mid August, the market has started to stop falling and rebound, accelerating the rise of the market.
"The price of PC market has soared this time, mainly because there are many favorable factors." Zhou Dongchao said that, first of all, on August 14, the Ministry of Commerce issued a notice on the preliminary determination of anti-dumping investigation on imported PCs originating in Taiwan, China. Starting from August 15, 2023, when importing the investigated products produced by various companies, import operators shall provide corresponding deposits to the Customs of the People's Republic of China based on the deposit ratio (not less than 16.9%) of each company determined in this preliminary determination.
Industry insiders said that the average monthly PC import volume in Taiwan, China this year was about 23000 tons. The collection of margin and the final implementation of anti-dumping tax rates are expected to be determined from October to November. At that time, the original duty-free advantage of PC sales from Taiwan to the mainland will completely disappear, resulting in a significant increase in sales costs, which will bring great pressure to corresponding enterprises. As for the mainland market, the significant decrease in PC circulation in Taiwan will lead to a certain release of market supply pressure.
In addition, factors such as the scheduled maintenance period and temporary shutdown of large domestically produced PC devices have added benefits to the supply side. Starting from August 20th, Wanhua Chemical's 500000 ton/year PC device will enter the scheduled maintenance period for one month; On August 22nd, a 260000 ton/year PC plant of Zhejiang Petrochemical was temporarily shut down, with an estimated 10 days. Due to various factors, the supply in the PC market has significantly decreased, and the lowest capacity utilization rate in the domestic PC industry has also dropped to below 65%, reaching the lowest level since mid July, providing the market with momentum to go long.
Industry insiders have stated that due to the ongoing impact of large-scale device shutdowns and maintenance, domestic PC manufacturers have little production and sales pressure, and factories and intermediaries have an optimistic attitude, mainly relying on joint efforts to actively support prices. It is expected that the PC market will continue to rise in the short term.
Stable and dynamic raw materials
From the upstream perspective of PC, bisphenol A, as a raw material for PC, showed a slow upward trend in the market after entering August, and remained quoted at 10900 to 11000 yuan by the end of the month. The market for phenol acetone, the raw material of bisphenol A, has experienced a rise before a decline, ultimately leading to a narrow decline in the center of gravity. Comprehensive factors have led to limited fluctuations in the cost of bisphenol A.
Xiangfeifei, an analyst at Longzhong Information, introduced that there is a shortage of new epoxy resins downstream of bisphenol A, resulting in poor purchasing power for bisphenol A. Another downstream PC operating rate has decreased, which has cooled down the procurement of raw materials and resulted in light market trading. At present, Wanhua Chemical and Zhejiang Petrochemical's Phase II bisphenol A plants have been shut down one after another. The utilization rate of domestic bisphenol A production capacity has significantly decreased, and there is still support for the supply side mentality of the industry. Holders have low intentions to sell, and the focus of negotiations in the bisphenol A market is limited.
Benefiting from the significant stability and small fluctuations in the bisphenol A market, the profit situation of the PC industry has improved, and the profit margin has expanded to over 100 yuan, an increase of over 200 yuan compared to early August, with an increase of over 200%.
According to statistics, as of July, the newly released production capacity of domestic bisphenol A plants this year was 480000 tons, an increase of 665400 tons or about 49.7% compared to last year. The downstream of bisphenol A - epoxy resin and PC have expanded their capacity to over 200000 tons; Among them, PC is the largest downstream of bisphenol A, accounting for 65% of the consumption.
In the future, some bisphenol A plants have been shut down for maintenance, resulting in a decrease in supply. However, downstream restocking lacks initiative and is mainly focused on restocking on demand. Industry insiders expect the short-term market for bisphenol A to exhibit a narrow range of volatility. Although there is little risk of a significant decline, it is difficult to inject effective momentum into the PC market's rise.
Demand falls short of expectations
From the perspective of PC terminals, after the comprehensive lifting of domestic epidemic control, the recovery of terminal consumption has not been as expected. Except for the performance of automobiles and new energy vehicles, the production and sales data of other terminal industries have shown a downward trend year-on-year. The number of domestic and foreign trade orders is insufficient, and the opening rate of PC downstream factories is low. The incremental consumption of PC has always been insufficient.
Industry insiders say that the data from the first half of the year also confirms this point. The production of automobiles, new energy vehicles, and electrical instrument and meter industries has all increased compared to the same period last year, and the consumption of PC and modified alloys has increased.
Sales personnel from Jilin Petrochemical stated that the production of mobile communication handheld devices, electronic computer machines, and microcomputer equipment in the industry has decreased by 3.10% to 25.70% compared to the same period last year. The decline in terminal demand has led to a continuous shortage of operating rates in the downstream injection molding industry of PC.
In the future, the new order volume of downstream terminal factories is limited, and the consumption of PC goods is slow. In addition, the downstream has a resistance towards high priced PC goods, making procurement relatively cautious.
Continuous tightening of supply
Jin Lianchuang analyst Zhou Dongchao introduced that in August, the domestic PC market demonstrated a "V-shaped" trend. Since mid August, the market has started to stop falling and rebound, accelerating the rise of the market.
"The price of PC market has soared this time, mainly because there are many favorable factors." Zhou Dongchao said that, first of all, on August 14, the Ministry of Commerce issued a notice on the preliminary determination of anti-dumping investigation on imported PCs originating in Taiwan, China. Starting from August 15, 2023, when importing the investigated products produced by various companies, import operators shall provide corresponding deposits to the Customs of the People's Republic of China based on the deposit ratio (not less than 16.9%) of each company determined in this preliminary determination.
Industry insiders said that the average monthly PC import volume in Taiwan, China this year was about 23000 tons. The collection of margin and the final implementation of anti-dumping tax rates are expected to be determined from October to November. At that time, the original duty-free advantage of PC sales from Taiwan to the mainland will completely disappear, resulting in a significant increase in sales costs, which will bring great pressure to corresponding enterprises. As for the mainland market, the significant decrease in PC circulation in Taiwan will lead to a certain release of market supply pressure.
In addition, factors such as the scheduled maintenance period and temporary shutdown of large domestically produced PC devices have added benefits to the supply side. Starting from August 20th, Wanhua Chemical's 500000 ton/year PC device will enter the scheduled maintenance period for one month; On August 22nd, a 260000 ton/year PC plant of Zhejiang Petrochemical was temporarily shut down, with an estimated 10 days. Due to various factors, the supply in the PC market has significantly decreased, and the lowest capacity utilization rate in the domestic PC industry has also dropped to below 65%, reaching the lowest level since mid July, providing the market with momentum to go long.
Industry insiders have stated that due to the ongoing impact of large-scale device shutdowns and maintenance, domestic PC manufacturers have little production and sales pressure, and factories and intermediaries have an optimistic attitude, mainly relying on joint efforts to actively support prices. It is expected that the PC market will continue to rise in the short term.
Stable and dynamic raw materials
From the upstream perspective of PC, bisphenol A, as a raw material for PC, showed a slow upward trend in the market after entering August, and remained quoted at 10900 to 11000 yuan by the end of the month. The market for phenol acetone, the raw material of bisphenol A, has experienced a rise before a decline, ultimately leading to a narrow decline in the center of gravity. Comprehensive factors have led to limited fluctuations in the cost of bisphenol A.
Xiangfeifei, an analyst at Longzhong Information, introduced that there is a shortage of new epoxy resins downstream of bisphenol A, resulting in poor purchasing power for bisphenol A. Another downstream PC operating rate has decreased, which has cooled down the procurement of raw materials and resulted in light market trading. At present, Wanhua Chemical and Zhejiang Petrochemical's Phase II bisphenol A plants have been shut down one after another. The utilization rate of domestic bisphenol A production capacity has significantly decreased, and there is still support for the supply side mentality of the industry. Holders have low intentions to sell, and the focus of negotiations in the bisphenol A market is limited.
Benefiting from the significant stability and small fluctuations in the bisphenol A market, the profit situation of the PC industry has improved, and the profit margin has expanded to over 100 yuan, an increase of over 200 yuan compared to early August, with an increase of over 200%.
According to statistics, as of July, the newly released production capacity of domestic bisphenol A plants this year was 480000 tons, an increase of 665400 tons or about 49.7% compared to last year. The downstream of bisphenol A - epoxy resin and PC have expanded their capacity to over 200000 tons; Among them, PC is the largest downstream of bisphenol A, accounting for 65% of the consumption.
In the future, some bisphenol A plants have been shut down for maintenance, resulting in a decrease in supply. However, downstream restocking lacks initiative and is mainly focused on restocking on demand. Industry insiders expect the short-term market for bisphenol A to exhibit a narrow range of volatility. Although there is little risk of a significant decline, it is difficult to inject effective momentum into the PC market's rise.
Demand falls short of expectations
From the perspective of PC terminals, after the comprehensive lifting of domestic epidemic control, the recovery of terminal consumption has not been as expected. Except for the performance of automobiles and new energy vehicles, the production and sales data of other terminal industries have shown a downward trend year-on-year. The number of domestic and foreign trade orders is insufficient, and the opening rate of PC downstream factories is low. The incremental consumption of PC has always been insufficient.
Industry insiders say that the data from the first half of the year also confirms this point. The production of automobiles, new energy vehicles, and electrical instrument and meter industries has all increased compared to the same period last year, and the consumption of PC and modified alloys has increased.
Sales personnel from Jilin Petrochemical stated that the production of mobile communication handheld devices, electronic computer machines, and microcomputer equipment in the industry has decreased by 3.10% to 25.70% compared to the same period last year. The decline in terminal demand has led to a continuous shortage of operating rates in the downstream injection molding industry of PC.
In the future, the new order volume of downstream terminal factories is limited, and the consumption of PC goods is slow. In addition, the downstream has a resistance towards high priced PC goods, making procurement relatively cautious.
However, as the "golden nine silver ten" era approaches, the demand for PCs may rebound. However, in the past two years, the PC industry chain has been "golden nine not golden", and industry insiders expect this situation to continue this year, and the industry has not given PC "golden nine" too high expectations. Therefore, it is expected that the demand in the PC market will not recover significantly, and the support effect on the PC market may be limited, which will limit its upward trend and duration.
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