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Insight | Time: May 25 2023 11:18AM  Editor:Tina Kong
PTMEG plants may be more entangled with price settlement in June
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BDO prices increased and the production curtailment of spandex units was delayed in May. Mainstream PTMEG plants saw high sales ratio and low inventory. The delivery was slightly tight in some companies. Stimulated by the cost and sales, PTMEG producers revised up offers in May. The discussion was in stagnation, but the upward direction of sellers was consistent, while the increment was diversified.


PTMEG market may be more complex in Jun.


Firstly, the chemical products and oil market did not perform well. As a result, sidelined attitude strengthened on downstream and upstream sectors.


Secondly, price of BDO started falling from mid-May. Therefore, PTMEG price lacked solid support from the cost side.


Thirdly, spandex plants faced big pressure from losses. Most factories have suffered losses in May, while enterprises with advantages in scale, technology and energy managed to be near the break-even line.


More spandex plants started scaling down production with losses pressure. The operating rate of spandex plants accelerated falling in late-May, which has been around 70% now. Many spandex producers intend to cut production further.



Fourthly, it is the news of capacity expansion. Huaheng's PTMEG project started construction from 2022 and is scheduled to start operation in Jun-Jul. The new unit in Jun will be hard to impact the actual supply, exerting more effect on the market sentiment. Under current market sentiment, spandex plants are expected to show weaker intention to hoard up goods. Meanwhile, supply of PTMEG is likely to reduce in Jun as CPP Panjin has turnaround. Guotai Xinhua will have maintenance too. That means the actual supply of PTMEG is likely to inch down in Jun.  


Fifthly, the mindset of PTMEG plants. Most PTMEG plants face very low inventory now but the inventory may pile up in Jun as spandex plants plan to cut production. However, the overall inventory may sustain low. PTMEG market is expected to enjoy the best supply/demand pattern on the whole value chain.


The PTMEG market fundamentals are estimated to weaken in short run but will continue enjoying support, while demand is anticipated to dwindle further. Coupled with falling feedstock cost and in expectation of the release of new units, many buyers turn to hold bearish mindset. PTMEG plants may be more entangled with price settlement in Jun.

[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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