POM Market in China witnesses Price Hike Amid Tight Supply Conditions

The price of Polyoxymethylene (POM) remained on the higher end in China during May 2024. In the Chinese market, the supply of POM has tightened considerably. This contraction is primarily attributed to the maintenance activities undertaken by significant producers such as Shenhua Ningmei and Xinjiang Guoye. These maintenance shutdowns have led to a reduction in the operational capacity of POM manufacturers, subsequently decreasing the overall supply in the domestic market. The lowered operating rates have exacerbated the tight supply situation, creating a more challenging environment for buyers and influencing the market balance.

Despite the supply constraints, the demand for POM has remained relatively stable. The average demand has been maintained to support ongoing production activities. The automotive and construction sectors, which are major consumers of POM, have shown varied performance trends. The construction industry has exhibited only an average activity level, which has supported a consistent demand for POM used in various construction-related applications.

However, the automotive sector has not performed as robustly. Automotive component manufacturers have experienced weaker order levels over the past few weeks. This decline in demand from the automotive industry has partially offset the impact of reduced supply, preventing a significant supply-demand imbalance. Nevertheless, the sustained demand from other sectors has ensured that the overall demand for POM remains steady.

The pricing of POM is significantly influenced by the cost of its feedstocks, namely Formaldehyde and Methanol. Recently, the prices of Formaldehyde have shown improvement, contributing positively to the POM market. Furthermore, Methanol prices have been fluctuating in an upward pattern, adding to the cost pressures on POM production. These increases in feedstock prices have directly impacted the cost of producing POM, leading to an upward adjustment in POM prices.

Due to supply constraints from maintenance activities, the cost of POM settled at USD 2035/MT, appreciating by 2% on a FOB Ningbo basis for the week ending May 24, 2024. This increase reflects market sensitivity to supply fluctuations, supported by stable demand from construction, and automotive sectors.

Overall, the POM market in China is poised for a period of tight supply and stable to slightly increasing prices, influenced by feedstock costs and downstream sector performance. In conclusion, the expectation is that the cost of POM in the Chinese market will stabilize as supply improves and feedstock prices stabilize. These factors, coupled with steady demand from key sectors, are likely to support a more balanced market for POM shortly.