SunSirs: POM Market Expected to Face Downward Pressure and Volatility

According to China Plastic Online, the domestic POM industry is reaching a critical turning point as new production capacity comes online, shifting the market from a tight balance to a state of oversupply. While geopolitical conflicts in the Middle East provided a temporary boost in the first half of 2026—briefly delaying the onset of the oversupply cycle—the dissipation of these external disruptions means that supply-demand imbalances will once again come to the fore in the second half of the year, keeping the market under pressure and prone to volatility.

Market trends in the first half of the year fell into three distinct phases. January and February were characterized by narrow-range fluctuations; around the New Year, manufacturers held ample orders and low inventories, fostering positive market sentiment. Traders raised quotes accordingly, but downstream buyers resisted high prices, resulting in a slow pace of procurement. As the Spring Festival approached, industry participants adopted a "wait-and-see" attitude, causing spot market trading to virtually stall. Post-holiday, inventories began to accumulate, and mainstream ex-factory quotes were generally lowered, with market activity limited to sporadic purchases for immediate needs. During this phase, POM market trends were driven entirely by supply-demand fundamentals. A strong rally occurred from March through early May; the Middle East situation drove up methanol costs, while low manufacturer inventories and restricted sales fueled market speculation and pushed prices higher—though these high prices proved difficult to pass on to downstream sectors. Price movements during this period were primarily dictated by raw material costs. From mid-May through June, the market entered a sustained decline; high prices stifled procurement, inventories piled up, and traders sold at a loss while manufacturers repeatedly cut quotes. By the end of June, prices for most supplies had fallen below pre-conflict levels and returned to the cost line, completely erasing the premium generated by earlier geopolitical disruptions as the impact of costs faded. In this phase, POM pricing logic reverted to supply-demand fundamentals.

Looking ahead to the second half of the year, there remains insufficient support for an upward market trend. On the cost side, methanol prices have fluctuated downward, offering little impetus for price increases. Regarding supply, overall availability remains ample; while some production units underwent maintenance in July and August, the restart of previously idled capacity offset the resulting volume reduction. Furthermore, the potential commissioning of Shandong Lihuayi’s 80,000-ton POM unit and Yankuang’s 40,000-ton unit after October threatens to exacerbate the oversupply situation. On the demand side, July and August marked the traditional off-season, characterized by shrinking orders and low restocking interest among downstream factories; although demand recovered somewhat during the September peak season, the growth in essential demand was insufficient to absorb the new supply.

In summary, the short-term benefits from geopolitical factors have been fully absorbed. The industry is currently facing a concentrated release of new capacity and a persistently loose supply environment. Meanwhile, downstream demand remains constrained by the lingering effects of the off-season and limited growth during the peak season. Without strong market drivers to provide a floor, there is little room for sustained upward movement; consequently, POM prices in the second half of the year are expected to fluctuate within a narrow, slightly bearish range, anchored by cost levels.

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