London (GC Intelligence) – Changes in polycarbonate (PC) trade patterns are aggravating the current oversupply in Europe after the latest data showed that from January to March exports decreased and imports increased between 2018 and 2019.
The current trends in trade add further pressure on a market that has been experiencing a slowdown in prices that resulted in margins reaching very low levels.
A strong global demand growth in 2018 supported higher exports to China and at the same time helped to tighten the domestic market.
But at the end of 2018 the market changed direction. Trade disputes lowered demand and increased uncertainty. While the market has been expecting a rebound ever since, there is little to suggest that a recovery is just around the corner.
Europe is a major exporter of polycarbonate to China. The ongoing trade war has lowered the country’s demand, causing a decrease in exports from Europe.
The overall slowdown in Asia also likely fuelled the slight increase in imports from the region.
The new capacity in China is also a factor that could be fuelling the current shifts in trade patterns. It is estimated that 500,000 metric tonnes of new Chinese polycarbonate capacity is expected to start in 2019. While the recent slowdown in demand could cause delays, it is unlikely that it will stop all operators from starting up their new plants.
What is more, the recent gains in the value of the Euro against the US dollar make European PC less competitive and therefore could potentially fuel the current trend by slowing down exports and incentivising imports.
Market participants in Europe had anticipated a rebound in May on the back of an ease in trade issues. Some buyers were expecting prices to recover and had high stocks. The surprise big setback in the trade dispute instead caused further price decreases.
Headlines suggest the global economy remains on a weak trajectory that could threatened the expected rebound later in the year. The current pattern of higher imports and lower exports could therefore remain in place and keep the pressure on polycarbonate supply in Europe.
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