Summary of PET bottle chip supply and demand dynamics in the H1 2025

In the first half of 2025, China's PET bottle chip industry continued to experience a supply surplus, with processing margins significantly compressed. On one hand, new capacities commissioned in 2023-2024 were mostly released in 2025. On the other hand, market share competition intensified. Furthermore, some plants, after expanding bottle chip capacity, needed comprehensive upstream and downstream coordination, making them often hesitant about production cuts and shutdowns.

Figure 1. Key PET bottle chip indicators comparison in H1 2025

Price and profitability

In H1 2025, average price of water bottle chip was 6,050.5yuan/mt EXW in East China, while the average export price was $787.9/mt FOB Shanghai. These represent year-on-year declines of 14% and 12.8%, respectively. The volatility rates for domestic and export price were 3.8% and 3%, higher than the 1% rate in the same period last year. This indicates price fluctuations in H1 2025 were slightly larger than last year, increasing market operation difficulty during certain periods.

The domestic price peaked in mid-January at 6,447yuan/mt EXW and hit a low in early April at 5,388yuan/mt EXW. The export price peaked at $820/mt FOB Shanghai and bottomed at $730/mt FOB Shanghai.

Looking at upstream raw material costs from January to June, the average domestic and import costs were 5,683yuan/mt and $705.4/mt respectively (calculated as 0.859*PTA + 0.335*MEG). This resulted in PET bottle chip processing margins of 367.5yuan/mt and $82.5/mt respectively. Export profitability was significantly better than domestic sales in H1.

Capacity and production

By the end of June, China's designed capacity of PET bottle chip reached 21.68 million tons per year. New capacities primarily included Sanfame's 750kt and Sinopec Yizheng's 500kt. New capacities scheduled for H2 2025 are limited to Fuhai Group's 600kt and Sichuan Wuliangye's 100kt, with Wuliangye's startup expected around year-end.

The PET bottle chip capacity expansion cycle gradually drew to a close in 2025. However, due to substantial expansions in the previous two years, H1 production growth exceeded expectations. According to CCFGroup statistics, domestic PET bottle chip output in H1 2025 was around 8.71 million tons, a 16.6% year-on-year increase. Q1 output was 3.917 million tons (up 11% YoY), and Q2 output was 4.796 million tons (up 21.7% YoY).

Demand growth

According to CCFGroup statistics, PET bottle chip consumption in January-June 2025 was approximately 7.9 million tons (June export data is preliminary as official figures are pending), significantly lower than domestic output, indicating a gradual inventory build-up. This comprised domestic demand of 4.44 million tons and exports of 3.46 million tons (export total is an estimate combining two HS codes), representing YoY growth of 1.4% and 16.5%, respectively. Overall, domestic demand growth in H1 was weak, with some months even showing YoY declines. While export sales dipped in the latter part of Q2 due to freight costs, exports remained the primary source of demand growth.

Due to the domestic demand decline in H1, PET bottle chip total inventory increased month-on-month. By the end of June, monthly total inventory surpassed the 3-million-ton mark, reaching approximately 3.1 million tons–an increase of about 810kt since the end of last year. However, as PET bottle chip plants had secured large terminal orders in advance and increased contracted volume shares at the beginning of the year, the pressure from supply growth was largely shifted to the spot market. Nevertheless, abundant spot supply continued to suppress price increases, keeping processing spread compressed into loss-making territory for an extended period. By the end of Q2, major domestic PET bottle chip producers had increased plans for production cuts and shutdowns, with some already implemented.

Overseas market

Excluding new capacity expansion plans by three domestic plants, only one new overseas PET bottle chip plant was commissioned in 2025: Sasa's 300kt facility. However, due to PTA operational issues, this new plant has not yet been heard to offer formal sales quotes, thus its overall market impact remains relatively limited.

Regarding trade barriers against Chinese PET bottle chip, the main focus in 2025 was on developments in Mexico, Malaysia, and Canada. Latest updates show all three countries have announced preliminary or final rulings. Canada imposed a preliminary combined anti-subsidy and anti-dumping duty of 128.8% on mainland Chinese PET bottle chips, with the final ruling expected by September 15th. Mexico imposed anti-dumping duties: Wankai at 0%, Sanfame at $40-260/mt, CRC at $120/mt, and other suppliers at $260/mt. Malaysia's final ruling resulted in duties of 4.58% for Far Eastern, 2.29% for Sanfame and 11.47% for others.

Summary

Overall, while new domestic PET bottle chip capacity additions decreased in 2025, the supply pressure remained significant due to substantial expansions in the prior two years. Although numerous production cut and shutdown announcements occurred in Q3, supply pressure is expected to increase again as idled units restart later, limiting price upside. On the export front, China's upstream raw material cost advantage remains evident, making continued full-year export volume growth highly probable. Therefore, the PET bottle chip market in H2 needs continued focus on the commissioning progress of new capacities and the restart schedules of idled units. If shutdown durations are extended, PET bottle chip producers' price adjustment room will also be relatively constrained.