Lead: In August, the polycarboxylate superplasticizer (PCE) monomer industry has fallen into a pattern of "high costs, weak demand": the tight spot supply of feedstock ethylene oxide shows no signs of easing, with prices holding steady. However, PCE monomer demand remains in its off-season, and downstream buyers have limited acceptance of and purchasing at high prices, resulting in subdued market transactions. Costs and supply-demand fundamentals are expected to remain in contention, with no notable positive catalysts on the horizon. PCE monomer prices in August are likely to decline before stabilizing in a stalled range.
Weak demand weighs on monomer prices, which begin to soften
Entering August, PCE monomer prices have shown a trend of initial stability followed by a decline, with the core contradiction centering on the tug-of-war between rigid cost support and weak demand-side suppression.
The cost side provides relatively strong underlying support. Amid recurring geopolitical friction between the US and Iran, the related product ethylene glycol has performed strongly, prompting some co-production units to shift output toward ethylene glycol, lending some support to ethylene oxide. Although the number of ethylene oxide units under maintenance has decreased, spot supply in the market remains tight, and feedstock prices stay high and firm, forming a floor of support beneath PCE monomer prices.
The demand side, meanwhile, lacks upward drivers. The market remains in its traditional off-season. Downstream construction projects have seen slower progress on existing work due to high temperatures, typhoons, and rainfall. Downstream buyers show low acceptance of high-priced materials, with procurement limited mainly to small-lot, need-based replenishment. In August, PCE monomer producers have seen a slowdown in new order intake, focusing primarily on delivering previously accumulated orders. Overall market transaction sentiment has cooled compared with earlier in the period, and prices have retreated under the drag of weak demand.
As of August 13, regional quotes fluctuated within narrow ranges, with regional price differentials narrowing: the mainstream EPEG trading range in the East China market was 8,400–8,600 RMB/mt; in the South China market, the mainstream EPEG range was 8,500–8,600 RMB/mt; and in Northeast China, prices were slightly lower than in other regions due to the inflow of low-priced cargo, with the mainstream range at 8,350–8,550 RMB/mt.
Feedstock supply poses no pressure; prices remain firm
Feedstock ethylene oxide prices remain high and firm, with the supporting logic centered on support from the co-product ethylene glycol and the tight availability of spot supply. On the supply side, the industry's operating load rate is currently running at around 51%, a relatively low level for the period. Producers prioritize fulfillment of long-term contract deliveries in their shipments, leaving limited cargo circulating in the spot market, and the market exhibits a tight balance. On the profitability side, supported by lower upstream ethylene prices, the industry continues to operate in a positive profit state. As of August 13, the weekly average profit for ethylene oxide produced from imported ethylene was 692.05 RMB/mt, up 205.71 RMB/mt week on week. Under the combined influence of supply-side constraints and the co-produced ethylene glycol, ethylene oxide prices remain elevated, providing underlying cost support.
Slow release of new orders; inventory pressure gradually emerges at producers
According to Chempricehub monitoring data, as of August 13, the sellable inventory ratio at domestic PCE monomer plants stood at –20.57%, up 3.31 percentage points from the previous week; sellable inventory volume was –39,100 mt, an increase of 6,300 mt from the prior cycle. Positive catalysts for the monomer market remain limited at present. Some monomer producers have spot cargo available for sale. Downstream users, having stocked up earlier, are prioritizing consumption of existing inventories. In addition, as monomer prices begin a downward trajectory, the supply of low-priced cargo in the market has increased. Influenced by the "buy on rising, not on falling" mentality, enthusiasm for market procurement has weakened, downstream willingness to accept high-priced raw materials is low, and market purchasing remains limited to essential demand, with only sporadic new orders being released.
On the supply side, as of August 13, the capacity utilization rate of the domestic PCE monomer industry stood at 26.26%, down 1.43 percentage points from the previous week; weekly output was 29,300 mt, down 5.18% week on week. Although operating rates in the industry remain low, this stands in stark contrast to the weak demand. Expectations of rising producer inventories have strengthened, and the pressure of inventory accumulation is becoming increasingly apparent.
Outlook: With recurring geopolitical news from the Middle East continuing to disturb market sentiment, if cost support remains solid, the decline in monomer prices may slow.
Macro front: No significant new supportive policies have emerged domestically. US–Iran negotiations may see some progress, and there are expectations that the Strait of Hormuz may resume navigation. However, the situation could still fluctuate, continuing to disturb market sentiment.
Supply side: Monomer plant loads may see minor adjustments. No clear restart timeline has been announced for units under maintenance, though some units with brief shutdowns may resume operations. Overall operating loads are expected to remain at relatively low levels. Monomer producers are mainly focused on delivering earlier orders, and the supply side offers no notable positive guidance to the market at this stage.
Demand side: Downstream construction activity in China remains generally weak, with procurement continuing to center on need-based replenishment at lower prices. Amid the current rainy-season and high-temperature weather, downstream users, having made earlier purchases, may prioritize consuming existing inventories. Influenced by the "buy on rising, not on falling" psychology, downstream buyers remain highly wait-and-see, with insufficient purchasing intensity for raw materials. Market transaction sentiment is subdued, and the demand side offers no boost to the market at present.
In summary, the PCE monomer industry is currently being weighed down by three overlapping pressures—high costs, weak end-use demand, and compressed profit margins—keeping the industry operating at low utilization rates. If ethylene oxide prices remain firm, keeping upstream feedstock costs elevated, the monomer industry will remain in a negative profit state, narrowing the room for producers to cut prices and potentially slowing the pace of decline. Going forward, close attention should be paid to changes in ethylene oxide prices and inventory levels in the PCE monomer industry.
Comments
0