Limited upside potential: Polycarboxylate superplasticizer monomer prices decline during the "Silver October" period

Introduction: In October, while costs provided a floor of support, demand release fell short of expectations. Consequently, the domestic polycarboxylate superplasticizer (PCE) monomer market exhibited an overall weak downward trend. Looking ahead, ethylene oxide (EO), the primary raw material, is expected to remain stable as market participants adopt a wait-and-see stance. The demand boost from the traditional "Golden September and Silver October" peak season is gradually cooling off. New order transactions for PCE monomers are sluggish, with downstream factories exhibiting strong risk-aversion sentiment and cautious purchasing behavior. It is projected that the average price center for PCE monomers in October will decline month-over-month; however, considering that PCE superplasticizer enterprises are operating at negative margins, there may be some support against excessively low prices.

Limited Bullish Factors in the PCE Monomer Market Drive Weak Price Decline

Entering October, despite international oil prices remaining high and ethylene oxide prices holding firm at elevated levels, the improvement in demand for PCE monomers failed to meet expectations. As a result, the PCE monomer market trended downward from its highs. Influenced by the psychological tendency to buy when prices rise rather than fall, new order negotiations and volume expansion in the PCE monomer market were poor. Buyers showed almost no willingness to accept bulk deliveries at high prices, maintaining only rigid demand and prioritizing purchases at lower prices. Risk-aversion sentiment was prominent, with market participants cautiously controlling their inventory positions. As of October 15, the mainstream price for EPEG (a type of PCE monomer) in East China was 10,000–10,200 CNY/ton, a decrease of 600 CNY/ton compared to September 30, representing a drop of 5.61%. Compared to the September high of 12,100 CNY/ton, the decline was approximately 16.53%.

Ethylene Oxide Prices Remain High, Providing Cost Floor Support

In October, geopolitical disruptions continued to impact the market, keeping overall crude oil supply tight. Ethylene prices rebounded after a decline, providing cost-side support. Several EO units undergoing maintenance—including partial lines at Sanjiang, along with Taixing Jinyan, Fude Energy, Yangzi Petrochemical, Hainan Refining & Chemical, and Ningbo Fude—remained offline, ensuring that on-site supply pressure remained manageable. EO prices held steady at high levels, providing both cost-side support and positive market sentiment for PCE monomers. As of October 15, the EO price in the East China market was 9,700 CNY/ton, maintaining year-to-date highs and increasing by 3,550 CNY/ton year-over-year.

Poor Transaction Volume for High-Priced Supply Pressures Industry Profits

Although raw material EO prices remained firm at high levels, the weak supply-demand structure in the PCE monomer market, strong resistance from downstream users to high prices, and insufficient subsequent orders dragged down transaction volumes for high-priced goods. PCE monomer prices continued to slide, pushing the industry into a phase of losses and increasing cost pressures for producers. As of October 15, the weekly average cost for HPEG in East China was 10,759 CNY/ton, a month-over-month increase of 30 CNY/ton; the weekly average cost for TPEG was 10,549 CNY/ton, flat month-over-month. The weekly average profit for HPEG in East China was -414 CNY/ton, a week-over-week decline of 335 CNY/ton; the weekly average profit for TPEG was -349 CNY/ton, a week-over-week decline of 450 CNY/ton.

Peak Season Underperforms, Insufficient Volume in New Orders

In October, the operating rate of the Chinese PCE monomer industry showed an upward trend. Some integrated plants increased production of EO as ethylene glycol prices fell and profits narrowed, thereby boosting the operating load for PCE monomers. Statistics show that as of October 15, the capacity utilization rate of the domestic PCE monomer industry was 30.01%, an increase of 1.37% month-over-month; weekly output was 33,500 tons, up 5.02% week-over-week. Although some enterprises still had undelivered orders, the lack of trading volume meant that spot supply was generally ample, with no obvious shortages. The pace of goods transfer was smooth, and the supply side offered little support to prices.

From the demand perspective, although October is traditionally a peak season, the overall momentum for improvement was insufficient, resulting in a weak peak season. Resistance to passing costs downstream remained high. Downstream factories faced poor profitability and strong resistance to high prices, engaging in almost no speculative restocking or bulk inventory building. Purchases were primarily small-volume spot deals driven by rigid demand, with insufficient follow-up orders. Some small and medium-sized enterprises experienced unstable production, with some even undergoing phased shutdowns, further dragging down prices from the demand side. Regarding concrete shipment volumes, construction activities resumed across regions after the National Day holiday, but overall shipments declined year-over-year. As of October 15, the concrete operating rate was 7.03%, down 0.44% year-over-year, with shipment volumes at 1,408,371 cubic meters, a year-over-year decrease of 5.91%.

Outlook for October

Looking ahead to October, the weak demand situation remains difficult to change. While PCE monomer factories are gradually delivering previous orders and their willingness to absorb new orders is expected to strengthen, raw material EO prices are likely to remain relatively high, limiting the extent of price declines for PCE monomers. The domestic PCE monomer market is expected to exhibit a volatile trend following a decline.

Raw Material Side: Middle Eastern geopolitical tensions remain fluid, suggesting oil prices may fluctuate at high levels. With some ethylene units undergoing maintenance, spot resource availability may decrease, potentially boosting downstream buying interest and leading to stronger ethylene price consolidation. There are currently no expectations for the restart of EO units under maintenance, though some have planned maintenance schedules. Both cost and supply sides provide support for EO market prices. Domestic EO prices are expected to remain high in October, continuing to provide cost support for PCE monomers.

Supply Side: Some PCE monomer units face potential maintenance, while others are expected to maintain relatively stable loads. Overall operating rates may fluctuate within a narrow range. Many monomer producers will focus on delivering previous orders, leading to ample spot supply. Moderate discounts may be offered to facilitate transactions, meaning the supply side is unlikely to provide significant short-term support to the market.

Demand Side: Downstream superplasticizer manufacturers lack pricing power and face poor profitability, prioritizing the consumption of existing inventories. Although seasonal demand persists in October, replenishment expectations arise only as inventories reach low levels. Market sentiment remains cautiously bearish, with limited enthusiasm for spot stockpiling. Procurement will be cautious to avoid risks associated with further monomer price drops, focusing mainly on rigid demand. The demand side is unlikely to provide strong support to the market in the near term.

Overall Summary: Fundamentals for the PCE monomer market in October remain weak, exerting pressure on prices. However, sustained high EO prices provide strong bottom support for PCE monomer prices. The market is expected to continue balancing cost pressures against supply-demand dynamics, with the price center declining. If EO prices remain stable, the decline in PCE monomer prices may be limited.