??There was an overall consensus that the market will pick up post-Olympics, but restrictions placed for the games have curbed downstream demand more than earlier expected,?? a Shanghai based trader said in Mandarin.

High inventory levels, aggressive price cuts have scared off everyone into a wait-and-see stance, he added, referring to Sinopec ??s recent spate of price cuts to induce buying interest and reduce mounting inventory.

Chinese authorities introduced a series of bans and restrictions on chemical transportation, production and buy-sell activities from the beginning of June lasting through to 30 September to ensure a clean environment during the Olympic Games which it was hosting for the first time.

Import and export activities crawled to a standstill at the ports of host and co-host cities while a severe electrical shortage in Beijing, Qingdao and Shanghai forced petrochemical firms to intermittently shut or cut operating rates at their plants, reversing sentiment in the traditionally active third quarter.

Other market watchers said a US-led economic slowdown and rising energy costs added to weakening overseas demand for China??s products, including plastics and textiles which are made from petrochemicals.

The US is a major market for Asia??s trading economies, including that of China, and an economic slowdown curbs the purchasing power of its population as wages stagnate and layoffs increase.

??The current macroeconomic environment is taking its toil on the petrochemical sector,?? Yu Fangxing, an analyst from Dalian based Jianghai Securities said.

??Demand from multiple downstream sectors is soft due to rising energy costs, weak sales activity and this naturally has an impact on the buying sentiments for raw materials,?? he added.

The US is a key export market for Chinese products such as polyvinyl chloride ( PVC ) and polyethylene terephthalate ( PET ) and  housing woes coupled with the sub-prime crisis and economic slowdown has eroded the country??s appetite for imports.

Orders for Chinese textiles  and garments have been reported to have dipped almost 25% by the country??s Commerce Ministry on the weakening US dollar and added pressure to slumping demand.

The current weak sentiment is expected to continue through to the Paralympics , which runs from 6-17 September.

Nonetheless, some producers are optimistic of a delayed recovery at the start of the fourth quarter.

??Conditions in the furniture sector are likely to improve after the Paralympics. I would expect purchasing activity to be brisk. Moreover, it is the traditional peak for us,?? a melamine producer in southwest Sichuan province said.

Methanol traders also said they were expecting a rebound in November on as downstream formaldehyde demand picks up after the Paralympics and the end of the rainy season.

The rainy season usually dampens sentiment in the furniture sector, as adhesives take longer to dry in such weather.