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PTMEG Prices in Asia Remain Low Amidst Weak Demand
PTMEG Prices in Asia Remain Low Amidst Weak Demand

PTMEG Prices in Asia Remain Low Amidst Weak Demand

  • 25-Jun-2024 3:26 PM
  • Journalist: Peter Schmidt

Shanghai (China): During the initial weeks of June 2024, Polytetramethylene Ether Glycol (PTMEG) prices in the Asian market remained low, influenced by several factors. Diminished demand from downstream spandex industries and an oversupply situation were key contributors to this downward trend. The spandex market trended downward, with some manufacturers reducing production while others maintained optimum capacity, resulting in stable overall operating rates despite sluggish downstream demand and inventory pressures for certain producers.

Negotiations were affected by concerns over factory losses and narrow profit margins, contributing to a subdued trading atmosphere. Additionally, throughout May, easing concerns about input costs were observed as global crude oil demand continued to decrease, while supply remained high due to seasonal trends. Refining margins in Asia and the U.S. reached three-year lows in May, indicative of weak demand conditions. Global onshore oil inventories also grew for the second consecutive month in May, underscoring the imbalance between weak demand and ample supply in the market.

Throughout mid-June 2024, trading activity remained sluggish in China's PTMEG market, characterized by limited inquiries and subdued demand from downstream spandex industries. The decline in spandex prices continued unabated. Furthermore, the cost support from the feedstock tetrahydrofuran remained weak due to low demand and high inventory levels, exerting additional downward pressure on PTMEG prices. In addition to domestic challenges, orders for PTMEG from European countries also declined during this period, driven by geopolitical tensions, heightened inflation, and economic difficulties. These factors constrained the purchasing power of European consumers, particularly impacting imports of home textiles. This unfavorable scenario led to reduced sales and squeezed profit margins for market participants, prompting them to adjust their ex-quotations downwards in an effort to stimulate product sales. Within China, the spandex industry faced profitability challenges as companies struggled with declining sales despite significant capacity growth. The lack of robust support from feedstock tetrahydrofuran further compounded the market's downturn, reflecting a challenging environment for PTMEG and related industries.

Demand for PTMEG remains sluggish both in China's domestic market and globally, primarily due to lackluster performance in the downstream textile industry. The continuous decline in spandex prices has been intensified by global slowdowns in garment demand and economic uncertainties. This prolonged downturn has greatly subdued market sentiment, with minimal optimism prevailing among buyers. The stagnant momentum in the downstream textile sector, combined with subdued economic conditions, has exacerbated the situation further, leading to a significant reduction in PTMEG demand.

According to ChemAnalyst, PTMEG prices are expected to rise in the coming months due to seasonal demand improvements and a modest economic rebound in China. Robust supply and new contract tightening will push prices up. Gradual improvements in the manufacturing sector will increase PTMEG demand. Higher energy prices will also raise PTMEG production costs in the short term.

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