The Asian polycarbonate (PC) market faced a continued downturn in the last week of February as supply surged while demand remained weak. Moreover, major Asian countries, including China, relying heavily on imports from South Korea and Thailand, and the ample supply and sluggish demand kept price trends bearish across the region.

At the end of February, domestic PC enterprises in Asia increased production levels, pushing the industry's average operating rate up by 2% to over 82%. Weekly production remained exceptionally high, ensuring an abundant supply in the market. However, this supply-demand imbalance intensified PC price pressures, with some manufacturers setting new factory prices to attract buyers.

Additionally, high inventory levels across the supply chain added further strain on the market. Amidst ample product availability, pricing remained low as suppliers struggled to clear stocks amid weak downstream procurement. The supply side, therefore, provided little support for any price recovery in the PC sector.

The cost support for PC also weakened due to recent declines in the bisphenol A (BPA) market. The upstream market exhibited sluggish trading, with high prices turning downward, while phenol oscillated within a narrow range, providing only moderate cost support for BPA. Adding to the strain, feedstock prices in South Korea’s petrochemical sector, particularly at the Daesan Petrochemical Complex, remained stable despite recent power outages at Lotte Chemical and LG Chem plants. This stability in BPA prices failed to drive up PC costs, further limiting any potential price rebound.

Downstream demand for PC remained weak throughout late February, failing to show significant improvement from mid-month levels. Factories in China and other Asian countries resumed operations at a slow pace post-holidays, with minimal increases in production loads. Many downstream enterprises opted for a cautious approach, holding off on large purchases due to high existing inventories.

The PC downstream market sentiment reflected this weak demand, as buyers showed strong resistance to high-priced stocks, intensifying selling pressure on suppliers. The slow circulation in the market and a lack of substantial new orders prolonged the market downturn, continuing the light trading performance observed after the Lunar New Year holidays.

Looking ahead, PC prices in Asia are expected to remain weak in the short term. The sluggish BPA market offers limited cost support, while increased plant operating rates ensure an ongoing surplus in supply. With industry inventories at high levels and downstream recovery progressing at a slow pace, the supply-demand imbalance is unlikely to ease soon.

Additionally, the latest data from Drewry’s Intra-Asia Container Index (IACI) shows an 8% decline in regional spot container freight rates, which reached USD 615 per 40ft container on February 28. This suggests weaker trade flows within Asia, further signaling restrained demand for PC imports.

As per ChemAnalyst, the Asian PC market is poised for continued softness, with price pressures persisting unless significant improvements in demand materialize in the coming weeks.