London (GC Intelligence) — The European polycarbonate market continues to suffer from severe supply surplus. Any efforts to export this surplus is proving to be difficult. This is because China, Europe’s main trading partner, is also suffering from low demand.
Producers in Europe and in Asia are keeping operating rates down to balance the market. Sellers remain aggressive to place product in some sectors. Competition has been fierce particularly for optical media and sheet extrusion markets. Competition between suppliers has been so strong that it could signal the onset of a price war. For example, some sellers had to lower prices to avoid losing volumes on some accounts.
What is more, as demand is low, some buyers have little spare capacity in their inventories. This suggests that lowering prices may soon have little impact on demand. And as demand continues to slow in the summer, supply could increase even further. In the next few months and into 2020, there should be more pressure on supply.
There is around 500,000 metric tons of new PC capacity expected this year in China and which looks to be on track. With current lower global demand, this could stifle a price recovery in 2020.
Meanwhile, the latest data indicates that trade has not changed much since 2018. As activity remains low during summer, oversupply will most likely persist in August.