Divergent Trends in Polycarbonate Pricing: Surge in Saudi Market, Decline in German Market

The pricing of Polycarbonate exhibited a divergent trend in both the Saudi and German markets, driven by distinct economic factors such as high-interest rates, tight monetary policy, and a decline in new orders.

Polycarbonate prices have strengthened in Saudi Arabia recently, primarily attributable to heightened buying activities and companies securing new orders from end-use industries. Despite these positive developments, companies have pointed out that competitive pressures have hindered sales growth, tempering what could otherwise have been a more pronounced upturn driven by robust investment and favorable demand conditions. Polycarbonate prices were hovering around USD 2426/MT on a FOB Jeddah on the 15th of September 2023.

In August, the Purchasing Managers' Index (PMI) experienced a decline when compared to July. However, the non-oil private sector conditions showed marked improvement, albeit at a somewhat reduced rate. Employment levels within the non-oil economy exhibited a robust increase during August, with job creation accelerating compared to July. This employment growth was driven by sustained expansion in new business opportunities. The increased hiring activity and enhanced production capacity allowed companies to reduce their outstanding workloads further. Both employment and wages continued to rise as a response to business expansion efforts.

Polycarbonate has continued to witness strong demand, driven primarily by proactive efforts from merchants replenishing their material stocks in anticipation of future demand trends. Domestic initiatives like Vision 2030, which have predominantly fueled the growth in orders over the past month, are a significant contributing factor to this heightened demand.

The price of Polycarbonate exhibited a decline in the German market primarily due to the sharp downturn in the construction industry, exacerbated by the impact of rising interest rates. The construction sector faced headwinds, driven by rising interest rates and customer cautious behavior. This contributed to a further substantial drop in new orders among Polycarbonate manufacturers in August. The German construction Purchasing Managers' Index (PMI) remains below the threshold limit, signifying that the construction sector's recovery is expected to be prolonged.

In the recent weeks, the Polycarbonate new orders sustained a sharp decline, with the pace of this decline slightly accelerating compared to July. This decrease in new orders far exceeded the reduction in output. New export orders were notably down, particularly due to reduced European sales. However, it's worth noting that the rate of decline in new export orders moderated compared to the previous month and was significantly slower than the overall decline in new business.

The price of Polycarbonate is likely to increase in the Saudi market, primarily attributed to the government's crucial focus on bolstering the non-oil business sector. Meanwhile, in the German market, Polycarbonate prices are anticipated to remain uncertain, owing to the volatility in the construction sector.