London (GC Intelligence) – 07/12/18 – Polycarbonate supply is set to remain plentiful in Europe in December. Buyers since the summer have increasingly faced attractive offers from domestic suppliers as well as importers. While imports represent a small part of total European supply, since Europe is a significant net exporter, they nevertheless are likely to add to the downside. Polycarbonate has been very tight during 2017 and the first half of 2018. A combination during this period of good domestic demand and high prices in Asia attracting exports from Europe kept the market very tight. As supply tightened, prices experienced a strong and steady increase, reaching a peak in August. However, since September the situation has reversed.
The polycarbonate market in Europe during the past four months has considerably softened. The price correction has been steady and substantial, particularly in some market segments. A significant slowdown in demand and an increase in supply has resulted in prices decreasing €300 per metric ton or even €400 per metric ton since September for some market participants. The picture, however, has been a little different for some buyers of high-priced grades who predominately cannot switch suppliers easily to take advantage of the current, soft market dynamics. In fact, the lower priced grades, such as extrusion polycarbonate, is where the biggest losses seem to have occurred.
There are several contributing factors that have placed pressure on the market. The one that stands out the most is the ongoing trade dispute which has had a negative impact on the Chinese economy. A weak Chinese market has meant a slowdown in demand for polycarbonate from the country and a slowdown in exports from Europe. What is more, there has been a slowdown in domestic demand in Europe on the back of weakening economic conditions which have strengthened buyers’ resolve to stay cautions and keep stocks low. With no signs of improvement, particularly regarding the US/China trade dispute, which was arguably the trigger for this recent retreat, the outlook for the European polycarbonate market remains negative.
