SunSirs: China PC Market enters a Downward Channel after a Brief Stalemate in the first half of 2023

On June 30th, the Engineering Plastics Index was 666 points, a decrease of 41.63% from the highest point in the cycle of 1,141 points (2018-09-09), and an increase of 17.67% from the lowest point of 566 points on May 6th, 2020. (Note: The cycle refers to the period from December 1st, 2011 to the present)

In the first half of 2023, the prices of various domestic engineering plastics products mostly remained stagnant and fell. According to the monitoring of the Commodity Market Analysis System of SunSirs, as of June 30th, there were 2 products that rose and 3 products that fell on the list of engineering plastic prices. The main commodities that have increased are PET (+0.56%) and PA6 (+0.13%); The main commodities that fell were PA66 (-9.58%), PC (-14.02%), and POM (-20.33%).

In the first half of the year, the fundamental patterns of various products in the engineering plastic industry had their own strengths and weaknesses. The price trend in the first quarter naturally showed significant differentiation, but the common point was the general decline in the second quarter. As of the end of June, only PET and PA6 were able to maintain the price level at the beginning of the year, with other products experiencing even greater declines. Among the market bearish factors, in addition to the sustained high load and low consumption in the industry, the main impact comes from the weakening of international crude oil in the upstream of Tongtong. On the other hand, the current global impact of imported inflation still exists, and the profitability of engineering plastic production enterprises is still facing challenges. There is little improvement in the operational risks of factories at all levels. Overall, in the first half of the year, engineering plastics saw a combination of bearish conditions and a decline in the market.

According to the Big data monitoring of the price of SunSirs, the PC market in China entered a downward channel after a short stalemate in the first half of the year, and the negative market continued for nearly five months. The main factor that troubled the PC market in the first half of the year was the high start-up rate of the industry. In January, the overall operating rate of domestic PC was around 60%, and then rapidly increased to a three-year high of 70% load. The stock is abundant, and the supply pressure is profound. In the first half of the year, it smoothed out a group of positive results, resulting in continuous bearish guidance on the market. Upstream bisphenol A had already taken on last year's low price at the beginning of the year, but the market was weak and volatile within six months, with an overall decline, which provided poor support for PC costs. Downstream buyers just need to maintain production, and operators have a more wait-and-see mentality. In the past six months, the auction situation has gradually declined. The starting position of terminal enterprises within the range is not high, the actual stocking consumption is weak, and market trading is light. Traders' mentality has weakened. It is expected that the PC market will continue to maintain a supply-demand game in the second half of the year, and prices may be strongly correlated with the adjustment of operating rates.

In the first half of 2023, the market for the five types of engineering plastics mentioned above generally fell three times and remained stable, with overall gains being minimal and losses being significant. Within six months, the industry market has been weak and difficult to improve. Compared with the same period last year, the price position of each product is basically at a three-year low. At the same time, international crude oil fluctuated and fell, and the support for engineering plastics' common remote raw materials has cooled. In addition, the macroeconomic environment has not provided sufficient support for the engineering plastic industry, and polymerization enterprises are generally cautious in pricing. They often lower the factory price to reduce operational risks. Therefore, the commodity market analysis system of SunSirs believes that the fundamentals of the engineering plastic industry were weak in the first half of the year, and the market momentum was poor. At present, engineering plastics is about to gradually enter the off-season of demand, and it is expected that if the market turns positive, it may wait until the traditional peak season.

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