Why has PET bottle chip export margin compressed recently

In early July, as several major domestic PET bottle chip producers implemented planned maintenance shutdowns, the average operating rate of China's PET bottle chip plants successfully fell below the 80% threshold. By Friday of last week, it had declined to 79.7% (based on a designed capacity base of 21.68 million tons). Currently, the domestic PET bottle chip processing margin has rebounded from around 150-170yuan/mt in late June to approximately 350-400yuan/mt. However, the export processing margin has conversely narrowed from about $80-90/mt at the end of June to around $70/mt. The price spread between domestic and export markets is gradually shrinking.

According to CCFGroup statistics, PET bottle chip domestic price has gradually improved, yet the overall supply reduction remains smaller than last year (the July 2024 low was approximately 70-71% based on designed capacity). Consequently, processing margins remain suppressed at low levels with a relatively slow recovery pace. We attribute this primarily to two factors hindering price increases and margin recovery: 1. Amid declining upstream feedstock prices, PET bottle chip producers absorbed substantial orders through low prices to sustain shipments. For instance, procurement by major downstream end-users reached nearly 300kt on Monday and Tuesday last week, largely through pre-locked basis, with subsequent spot pricing concentrated at lower levels. 2. Producers have increased contracted sales volume this year. Traders hold ample contracted inventories, leaving spot market supply inadequately controlled. Significant plant transaction volume only emerge during traders' short-covering cycles after overselling.

Why has the export margin compressed recently?

As noted, abundant spot supply and regional/brand price differentials have prompted traders to shift domestic-focused volumes to export markets since Q2. Before 2021, the stable domestic-export spread offered limited arbitrage opportunities, and exports were primarily handled directly by producers via processing trade. However, post-2022, the widening spread opened RMB-USD arbitrage windows. By May 2025, general trade exports accounted for 29% of total bottle chip exports-a ninefold increase from 2.5% in 2020. Beyond traders' domestic-to-export shifts, some producers' domestic sales departments have also engaged in similar operations (offering prices slightly below their official FOB quotes but above domestic RMB levels).

Since the launch of PR futures, market strategies have diversified, but PET bottle chip producers' pricing power has gradually weakened. The industry now urgently requires not only supply-side "anti-involution" measures but also regulatory guidance to address long-standing disorderly competition practices.