Weaker Demand and Oversupply Situation Put Pressure on Global PTMEG Market

The global Polytetramethylene Ether Glycol (PTMEG) market has seen prices continue their downward trend into the second week of October 2024. The key drivers behind this sustained decline are sluggish downstream demand, primarily from the spandex industry, oversupply, and falling raw material costs. These factors have particularly impacted the Asian market, where price competition remains fierce, and high inventory levels persist.

In Asia, the traditional peak season for the spandex industry has failed to stimulate demand, leaving PTMEG and spandex producers burdened with significant selling pressure and mounting inventories. Despite some improvement in the export volumes of clothing and textiles, prices have not improved, limiting any substantial recovery in downstream demand. In addition, the decline in upstream crude oil until September 2024 due to weakened demand from key markets like U.S, China and feedstock tetrahydrofuran (THF) prices has further exacerbated the cost pressures on PTMEG, contributing to the bearish market sentiment.

In China, PTMEG prices are hovering near record lows as domestic demand remains weak. The spandex industry, a major consumer of PTMEG, has been under strain for the past few years, struggling with oversupply and declining prices. As a result, both domestic trade and exports have been sluggish, and traders are adopting a cautious approach. Some plants have reported inventory levels exceeding two months’ worth of production, which is keeping prices under sustained pressure. Additionally, retail sales of clothing, textiles, and footwear in China have declined, further weakening demand from the downstream sectors.

In South Korea, PTMEG prices have followed a similar downward trend, driven by a slowdown in the petrochemical sector and falling demand. Petrochemical exports declined by 0.6% year-on-year in September, as domestic consumption lagged, and export activity slowed. The country's export growth also fell to 7.5% in September, down from 11.4% in August, as declining new orders further weakened PTMEG demand. The typically robust spandex market in the third quarter has yet to recover, leaving producers with growing stockpiles and reduced profitability. This prolonged period of oversupply and limited demand has deepened the market slump in the region.

PTMEG prices in Europe and the USA continued to decline as weak demand and oversupply plagued the markets. In Europe, inflation-driven declines in textile and apparel exports, along with shrinking manufacturing activity and reduced new orders, further worsened the supply-demand imbalance. The USA saw similar trends, with declining manufacturing activity and shrinking production exacerbating the oversupply problem. The operating rate of PTMEG plants decreased significantly due to falling profitability, while weak global crude oil markets in September added further pressure.

PTMEG market conditions are expected to remain weak in the coming weeks due to persistent oversupply and high inventories, especially in Asia. With subdued demand from key sectors like textiles and spandex, prices are likely to stay under pressure, and a significant recovery is not anticipated soon.