Amid Tight Supply, Polyoxymethylene Price Speculation Reman Strong in China

Recent Trends in China’s Domestic POM Market Show Upward Dynamics

As of August 14th, the domestic POM market in China has continued its upward trajectory, with spot prices persistently rising. The composite price of domestic POM was recorded at 13,550 RMB/ton, marking an increase of 5.45% when compared to the price level at the beginning of the month.

Supply Dynamics

Although domestic POM companies have been operating at high rates, there has been a noticeable correction recently. Contributing factors, such as unplanned maintenance across various facilities, led to a decrease in the industry's operating capacity by nearly 3% to about 81% in the last week.

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Despite the sustained high operating rates earlier, current inventory levels are low. Most enterprises are not facing inventory pressure; some are even reporting negative inventory levels due to overselling. This constrained supply of goods, coupled with a contraction in overall supply, continues to provide robust support for POM.

Demand Dynamics

The demand from the downstream POM enterprises in China is currently modest. However, the tight supply situation has sparked a speculative atmosphere in the market. There is a reasonable enthusiasm for stocking, and the volume of high-position orders is significant. Hence, from the demand perspective, the level of spot price support for POM is currently substantial.

As we move further into August, the POM market continues to exhibit a rising trend. The high operating rate of domestic polymerization plants has experienced a downturn, worsening the scarcity of goods available in the market. Presently, there is no industry-wide inventory pressure, and suppliers are finding strong support for spot goods.

On the demand side, external factors, including high temperatures and power restrictions, may lead to a decline in the operating rates of terminal enterprises. Concurrently, as POM prices have risen, resistance from downstream users is becoming more evident. Nevertheless, the short-term consumption has been invigorated due to the tightening of POM supply last week.

Traders’ confidence in the market remains steadfast, and speculative sentiment is still pronounced. Based on these factors, it is anticipated that the POM market will continue to strengthen, albeit within a narrow range, in the upcoming period.

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According to Procurement Resource, the price trend of Polyoxymethylene (polyacetal resin) has been surging of late. The primary reason could be slated on the tight-supply situations prevalent in China.

Although the external weather conditions have somehow decelerated the demand from the terminal industry, the stocking sentiment and the overall consumption is instrumental enough in keeping up with the optimal speculation in China, at least in the near-term.