The chemical market in July 2026 witnessed a dramatic "market reversal"-a scenario so unexpected that countless industry insiders exclaimed they had "never seen anything like it." In early July, the domestic PC market continued the weak, corrective trend seen in May and June; prices fluctuated at low levels, trading was sluggish, and the general market sentiment was bearish, with expectations that the industry would remain at rock bottom. However, in mid-to-late July, the situation in the Middle East suddenly escalated and geopolitical conflict reignited. This instantly ignited the previously lackluster PC market: spot prices surged, manufacturers suspended quotations en masse, and spot supplies tightened, completely reversing the month's weak trend. July is traditionally a slow season for the PC industry; in previous years, high temperatures combined with weak downstream operating rates usually resulted in stable or declining prices. Why, then, did prices buck the trend and rise this year? Let's take a closer look.
In early July, the domestic PC market maintained a weak, downward trajectory, continuing the sluggish pattern seen previously; the turning point arrived in mid-month. A sudden escalation of military conflict in the Middle East caused widespread regional tension and led to tighter shipping controls in the Strait of Hormuz. As a critical artery for over 30% of global crude oil transport, shipping restrictions immediately triggered panic in global energy markets. International oil prices-specifically Brent crude-surged rapidly in the short term, completely reversing the earlier weakness. This strong rally in oil prices quickly cascaded down the petrochemical supply chain-from crude oil and naphtha to key upstream PC raw materials like Bisphenol A (BPA) and dimethyl carbonate (DMC). The resulting surge in cost-side support laid a solid foundation for the price increase during the PC industry's off-season.
Rising raw material costs were the primary driver behind the PC market's counter-seasonal rally in July.
Bisphenol A (BPA) is a core raw material for PC production, and its pricing is directly pegged to international crude oil trends. Following the escalation of tensions in the Middle East in July, several local petrochemical facilities in the region reduced operating rates, and the delivery of some feedstock export orders destined for Asian markets was delayed. Compounded by logistical bottlenecks in key shipping straits and a sharp rise in cross-border maritime insurance costs, the cost of imported Bisphenol A (BPA) in the domestic market continued to climb. Within just one week, domestic BPA prices rebounded sharply, reversing the previous downward trend. This placed immense cost pressure on domestic polycarbonate (PC) manufacturers, rapidly squeezing the profit margins they had enjoyed at lower price points and forcing major producers to raise ex-factory quotes in unison, thereby ending the practice of selling at low prices. As of July 14, the price of BPA in East China stood at 9,200 yuan/tonne-an increase of 850 yuan/tonne (or 10.78%) since the beginning of the month.
A supply-demand mismatch further amplified the upward trend in PC prices during July.
On the supply side, while many domestic PC plants had completed maintenance and capacity upgrades in the first half of the year, the industry's overall operating rate remained at a low-to-moderate level entering July. With spot inventories already low and overseas feedstock imports hindered, the market faced a severe shortage of additional spot supply. On the demand side, a structural recovery emerged; despite the traditional off-season, operating rates in niche sectors-such as new energy vehicle (NEV) components, high-end optical sheets, and smart home appliance casings-steadily rebounded. Sustained procurement to meet essential needs disrupted the typical off-season supply-demand balance.
Ultimately, this round of PC price increases was not driven by traditional fundamentals but was instead dominated by a geopolitical risk premium. Unlike previous price hikes-which were steady and predictable, driven by factors like maintenance schedules, peak-season stockpiling, or tight supply-demand dynamics-this surge was triggered by sudden conflict in the Middle East, resulting in high volatility and uncertainty. Even amidst the traditional off-season, with downstream buyers wary of high prices and cautious in their purchasing, the market continued to rally strongly, fueled by rising costs and market sentiment. Looking ahead, the upward trend in PC prices has not yet concluded; future movements will depend heavily on the evolution of the Middle East situation and international oil price fluctuations. Should geopolitical conflicts persist and shipping restrictions tighten, international oil prices will remain high, providing strong support for raw material costs; combined with low market inventories and a floor provided by inelastic demand, the PC market is highly likely to maintain its trend of rising strength despite the off-season. Conversely, if the situation in the Middle East gradually eases and oil prices retreat after an initial spike, the upward pressure on raw material costs will diminish; consequently, the PC market would cool down, the pace of price increases would slow, and the market would gradually realign with supply-and-demand fundamentals.