Lead: Entering September, polycarboxylate superplasticizer (PCE) monomer prices have continued to rise, with the price center moving upward to a high for the year. This is mainly due to the resonance of three bullish factors: cost support, no supply pressure, and demand recovery. The PCE monomer market in September is expected to remain at high levels. During the month, the geopolitical situation remains unclear. Ethylene glycol (MEG), a related feedstock product, may run at high levels, while ethylene oxide (EO) is also rising. Cost-side support is strong, and coupled with greater downstream purchasing enthusiasm, domestic PCE monomer market prices may still have upside expectations, with “Golden September” entering an upward trend.
Entering September, geopolitical conflicts continued and international crude oil prices ran firm. MEG port inventories fell to a nearly 10-year low, prices rose, and some co-production units shifted to MEG production. Spot EO supply became tight, and feedstock EO prices rose significantly, strengthening cost-side support for the PCE monomer market. From a fundamental perspective, the PCE monomer industry operating load rate remained at a historical low for the same period, so changes in supply had limited impact on market conditions. EO and PCE monomer market prices rose sharply, prompting downstream monomer users to enter the market and increase purchases out of fear of further price increases. Combined with tight spot availability, market trading improved somewhat, and many enterprises reported negative inventory. Driven by both cost and demand, domestic PCE monomer market prices rose. As of September 10, mainstream EPEG transactions in the East China PCE monomer market were at RMB 10,300–10,500/mt, up RMB 1,500/mt from end-August and RMB 3,400/mt higher than the same period last year.
The US-Iran conflict has intensified, and reports of another commercial vessel being attacked pushed international crude oil prices notably higher. Global merchant supply of MEG will directly contract. Based on current shipping schedules and plant operating plans, this tight supply expectation is unlikely to ease substantially at least before October. The domestic market will remain in a destocking channel, MEG prices have rebounded to around RMB 7,000, and some co-production units have shifted their production focus toward MEG. The supply of EO available in the market has narrowed, spot supply is tight, and EO prices have risen continuously, increasing cost-side support for the PCE monomer market. As of September 10, the East China EO market price was RMB 8,600/mt, RMB 900/mt higher than at the end of last month and RMB 2,300/mt higher than the same period last year.
As of September 10, the capacity utilization rate of China’s PCE monomer industry was 24.21%, up 0.49 percentage points MoM and down 15.86 percentage points YoY; weekly output was 27,000 mt, up 2.27% MoM and down 37.5% YoY. Some units that underwent maintenance earlier are not expected to restart for the time being. PCE monomer supply is at a historical low for the same period. Overall supply conditions are stable, and no supply pressure has emerged for now.
In September, end-use construction projects enter a rush period, and the downstream monomer sector enters its traditional peak demand season. Demand is characterized by marginal improvement but a slow recovery. In specific downstream sectors, concrete shipment volumes are increasing. As of September 10, the concrete operating rate was 6.43%, up 0.43 percentage points MoM, and shipment volume was 1,288,660 cubic meters, up 7.30% MoM. The impact of major weather factors in East China has weakened, and construction progress has recovered somewhat. Recently, South China has seen increased rainfall, and companies report a sharp decline in enthusiasm for real estate investment. In North China, stable weather provides a good foundation for project construction. Second, as September begins, winter is not far away, leaving limited construction time, so some projects need to catch up on progress, leading to a certain upward trend in overall market volume.
Overall, in September, downstream PCE monomer enterprises have insufficient growth in new orders, and feedstock price centers within the month are still higher than last month. Factories have limited ability to accept high-priced feedstock, and their procurement strategy remains one of essential-need restocking and cautious stockpiling. Although the MoM improvement in downstream operating data and peak-season expectations for “Golden September and Silver October” provide some support to the market, the industry operating rate is still below the same period in previous years. The weak demand reality is still unlikely to provide strong, sustained upward momentum for monomer prices, providing only bottom support.
Cost side: The feedstock EO price center is expected to move higher, strengthening cost support. The US-Iran conflict remains uncertain, and ethylene prices may run firm, providing cost support for EO. Cost support for PP also remains relatively strong. On the supply side, units that underwent maintenance earlier are not expected to restart in the short term, while some units have longer-term maintenance plans. There is currently no fixed schedule for imported MEG cargo arrivals. The tight spot EO supply may persist, and spot inventory levels across the industrial chain are generally low. Overall supply-side pressure is likely to remain within a controllable range. Meanwhile, downstream sectors are gradually entering the seasonal peak season, and demand is expected to improve. Overall, China’s EO market price is expected to fluctuate upward in September, strengthening cost support for PCE monomer.
Demand side: Downstream demand is gradually being released, and spot feedstock procurement is mainly for essential needs, with periodic concentrated restocking. The downstream construction industry for PCE monomer is gradually entering its traditional peak season, and overall downstream feedstock demand is expected to increase. However, some downstream players have already concentrated restocking early in the month; in the short term, spot procurement may remain based on essential needs, with periodic concentrated restocking. As their own profit margins are compressed, they are cautious about chasing high prices to restock. Overall, the demand side may provide bottom support to the market.
Supply side: No new plant capacity is expected in September. If monomer producers come under cost pressure later, some individual enterprises may reduce operating rates. The PCE monomer industry operating load may remain low, and market supply is expected to be controllable. At the same time, with acceptable accumulated orders and support from high costs, monomer holders are reluctant to sell at low prices, providing relatively strong support to low-end prices in the monomer market.
Overall, with feedstock prices staying high, supply controllable, and demand increasing, and supported by cost support plus a phased improvement in shipments, the market may continue its positive trend. Later in September, PCE monomer market prices may still have upside expectations. In the medium to long term, however, if geopolitical tensions ease, the tight spot supply in the industrial chain is alleviated, market trends return to fundamentals, and downstream end-use support remains weak, the PCE monomer market may still face pressure. It is recommended to closely monitor the Middle East situation, feedstock EO supply, and downstream demand follow-up.
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