On the back of supply crunch, PTMEG prices soared in the Chinese Market

With minimal contracts, the PTMEG market rose in the first week of January. Mono Ethylene Glycol prices futures rose and spot prices were strong in the early week, owing to firmer demand and sluggish supplies. While cost support is not maintained, the raw material BDO price is running at a high level, and the market has strong pricing sentiments.

Domestic traders' demand for PTMEG was reported to be slow. The supplies were only made in order to fulfil export orders. As the burden of insufficient Polyester inventories mounted, due to the shortage of PTMEG, the domestic manufacturing producers felt the pinch. In the face of growing raw material prices, the atmosphere of terminal speculation and follow-up grew stronger. The entire domestic and export markets are now underperforming. Due to the multiple plant turnarounds that are scheduled for maintenance, the shipments are generally undeliverable.

With the forthcoming Spring Festival, the polyester industry chain has entered its traditional off-season, making it difficult for demand to perform well. The market is inelastic, and expectations on both sides of supply and demand are low. Also with crude prices increasing, prices of PTMEG and other downstream will rise consequently. The prices for PTMEG during December were assessed at USD 4800 per metric tonne FOB-Shanghai.

As per ChemAnalyst “PTMEG output is expected to gradually increase. Aside from unit restarts, some producers may return to EG output as EO demand gradually dwindles and restrictions on EO production and transport increase with the pandemic outbreak. On the demand side, orders in the weaving sector are dwindling, which is having a negative impact on upstream products. The idea that coal-based MEG reactors may be restarted in China has added to the pressure on stockpile levels.”