How Downstream Trend Reversal Impacts PTMEG (Poly-tetramethylene Ether Glycol) Futures in the Chinese Market
- 22-Apr-2022 5:25 PM
- Journalist: Xiang Hong
The PTMEG market climbed in the third week of April. Due to greater demand and slower supply, ethylene Glycol price increased, and spot prices remained solid in the early week. Domestic manufacturing firms felt the pain as the burden of inadequate Polyester stockpiles grew owing to the scarcity of PTMEG. The market was noted to be experiencing strong pricing sentiments in the face of rising raw material BDO prices.
PTMEG supply was easier to be scarce but difficult to be plentiful when demand recovered. However, because of increased supply but weak demand, the downstream spandex market encountered obstacles in tracing the advance on the PTMEG market. The price of spandex began to plummet in the fourth quarter of 2021, gradually declining to USD8000-8300/MT, a drop of roughly USD300/MT on a y-o-y basis. However, the fundamentals of the PTMEG market are likely to improve, however the downstream spandex market is under more pressure to maintain the upswing on the PTMEG market due to low demand during peak season.
PTMEG prices began to decline in January-February 2022, falling by around USD 1000/MT from their peak in Q4 2021. The degradation of PTMEG appears to be less than that of spandex. As a result, the profit margins of spandex shrank dramatically. Because the downstream market struggled to keep up with the upswing in the PTMEG market, the price of PTMEG only improved slightly and then rose significantly after March, despite rising sales ratios and rising costs. After the dip in January-February, PTMEG suppliers' confidence will take some time to recover.
The global commodities market experienced ongoing shifts in market dynamics in the first quarter of 2022. Several external variables, such as growing upstream values and geopolitical tensions, have influenced sentiments. The growing enquiries from the polyester and textile sectors have put pressure on supply dynamics in the Northeast Asian area, causing an imbalance in the entire demand-supply outlook. Market participants wanted to keep the wait-and-see attitude in China since the COVID spread limited market movement, making arbitrage difficult. As a result, PTMEG futures have been affected by positive sentiment in the Ether Glycol and BDO value cycle over numerous locations of the Northern Hemisphere.
As per ChemAnalyst, “Despite the fact that the PTMEG market is predicted to witness increased fresh demand and restricted supply, the price of PTMEG is more likely to curve a modest trend in the near term when the entire industrial chain is balanced, and sellers must guarantee sales capacity.”