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Features丨PTMEG Market: Taking Back the Lost Youth
Updated: 2017-06-06 14:58 Source: PUWORLD share:

China PTMEG market didn’t enjoy the peace its feedstock BDO market did recently. Following continuous ramping up in March and April, PTMEG market saw a significant push-up by major producers in May. Quotes and settle prices from China producers for Spandex and Non-spandex PTMEG are shown in below chart.

Reasons for price jump of PTMEG market:

Firstly, the push up was under preparation by major producers since late April, after a significant amount of BDO producers went into turnarounds come May, causing strains on feedstock supply and directly led to a increased feedstock cost. Below chart shows utilization rates of major producers in May, where shows the majority of BDO producers reduced their production, and by extend reduced supply volume of PTMEG.

On the other hand, PTMEG market also saw a round of maintenance shutdowns in April and May. April market already suffered from shutdown induced supply shortage in which some buyers had to wait till next month to receive their order, while situation took a worse turn when a wave of more crowded turnarounds came in May. Below is the chart that illustrates utility rates of major PTMEG producers in both April and May.

Secondly, as shown in below, spandex industry, a major downstream market of PTMEG, remained stable during April and May, running in general at 80-90%, consuming PTMEG at normal rate. Currently, spandex market already felt strong resistance from further downstream industries as market activity for spandex was abnormally low at this season of the year.

In non-spandex sector, PU resin production, impacted by environmental inspections and low demand, was running at moderate rate, most transactions being for basic demand. TPU industry also experienced moderate demand thus moderate purchase volume of PTMEG. Major TPU producers were focused on high-transparent film and wire industries where markets were more reasonable in changes and yields higher margins. While no significant changes happened further downstream as a result of balanced markets, imbalanced PTMEG market find the support it need for a price increase.

Thirdly, during a previous relatively long period of operating with little or no margin, PTMEG producers grew increasingly discontent and were easily triggered by the first sign of chances to push for their long deserving profit, in a fashion of taking back the golden age of PTMEG producer, a lost youth.

Nearly a month has passed now since the jump in early May, which the market took in with ease. However, opinions on how will the PTMEG market develop were vastly divided. PTMEG suppliers were overwhelmingly optimistic upon the possibility of prices remaining at high level, or even going up some more; as a result buyers of PTMEG did not stand a chance in resisting the increase during the past month, some producers wanted to go even further by reducing credit terms, in the sense of “liberated slaves celebrating their freedom in pride”. Some market players, however, believe that the increase was merely a combination of good timing in the supply cycle and short term optimism, and will not last when most units restart in June; plus given attempted price increases of downstream spandex were unsuccessful, TPU and resin market saw no significant changes, current high prices were not sustainable.


To date, feedstock BDO were still at high prices which could provide positive support for PTMEG, while some of PTMEG units were still shut which also support current prices, and downstream production was stable for the moment. So all in all, high prices of PTMEG seem to be able to stay for at least a while. Given diverged opinions, heated discussions are to expect.

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