PTMEG market eyes improving fundamentals

PTMEG market saw weak downstream market but strong upstream section after the Spring Festival holiday. Price of BDO shivered at low level before the Spring Festival holiday but started increasing after holiday due to recovering demand.

Price of BDO advanced by 2,000-2,500yuan/mt or 9.2% after holiday, pushing up the cost of PTMEG. In addition, downstream demand for PTMEG started recovering after holiday after some spandex units resumed operation from pre-holiday turnaround.

Demand for PTMEG apparently grew after the operating rate of spandex industry climbed up to above 90% again. Meanwhile, some new spandex plants are scheduled to commission operation later. However, there will be no new effective PTMEG projects in short run, except for the new unit in Hyosung Ningxia for self-sufficiency. Supply of PTMEG is expected to be tight from the angle of demand.

Price of PTMEG is anticipated to be low in Feb in short run based on demand and raw material trend, which may stop falling and even rebound in Mar. PTMEG market may witness firm fundamentals after new spandex plants started production in Q2. However, the follow-up of downstream market will be the biggest constrain for the upward space of PTMEG price. Price of spandex kept reducing after the Spring Festival holiday and the inventory burden remained. Spandex price has been near the cost and will have very small downward space. Spandex plants may try to raise price amid dropping price but advancing cost. Otherwise, their production activity will be impacted.