PTMEG market bolstered by BDO and spandex

Price of PTMEG surged more in Oct. Offers were mainly required at 23,000yuan/mt and higher at 24,000-25,000yuan/mt, negotiable in actual transactions. Soaring PTMEG price also stimulated price of spandex. Operating rate of spandex plants has obviously ascended due to growing demand. In addition, PTMEG price was also driven by hiking BDO price. Price of BDO climbed up in Sep and the delivery of BDO from some regions was still stifled.

The operating rate of spandex plants has ascended by 30 percentage points to near 80% now from 50% in early-Sep. The inventory of spandex fell to around 26 days from 45 days. Spandex plants increased production and saw reducing inventory, which stimulated the recovery of operating rate in spandex plants and further boosted demand for PTMEG.

PTMEG plants apparently slashed production in Aug and Sep. The operating rate of PTMEG plants also gradually recovered in Sep. Downstream plants increased replenishing, in expectation of rising PTMEG price. Sales of PTMEG improved in Sep, ending up with tight supply. As a result, PTMEG plants were confident in following the uptrend on BDO market in Oct.

Operating rate of BDO plants restored too while the delivery of BDO from some regions of Xinjiang and Inner Mongolia met resistance due to the spread of pandemic since Sep. Northwest China is major BDO production area in China. Supply of BDO was tight impacted by some non-industrial factors, and the spot supply was limited.

Supply side exerts more effect on the movement of the whole spandex value chain now. As normal supply has not been resumed due to the non-industrial factor, prices of BDO, PTMEG and spandex all present strong.

As some new BDO and PTMEG units are scheduled to start operation in the fourth quarter of 2022, supply will be gradually long. However, normal supply is estimated to be constrained in short run when the launch of some projects are delayed. The recovery of later supply and demand still needs to observe the supply recovery in some regions. Except for the impact of pandemic, the energy supply change should also be noted in Q4 after winter heating started.