PET bottle chip supply slightly recovers, with short-term focus on downstream pickup pace and new

Recently, the domestic PET bottle chip market has seen a moderate recovery in supply. As some previously idled units gradually resume operations and some company increases their operating rates, the overall industry run has risen. As of this week, the average operating rate of PET bottle chip plants has recovered to over 80%, indicating a partial restoration of market supply.

The slight rebound in the average operating rate of PET bottle chip plants is primarily due to two factors: first, the relatively stable and low prices of upstream raw materials such as PTA and ethylene glycol; second, the traditional peak demand season in summer has driven restocking demand from downstream soft drink producers, particularly in the fresh and cold beverage industry. Additionally, after proactive production cuts earlier, inventory pressure at PET bottle chip plants has significantly eased. The concentrated maintenance period between July and August reduced industry inventory levels by approximately 11% from their peak, and current inventory days at major producers remain within a reasonable range. This rebalancing of supply and demand has provided a buffer for the market and created conditions for the recovery of plant operations.

However, given the still weak supply-demand dynamics, major PET bottle chip producers have committed to maintaining a production cut of around 20% in September. The progress of new capacity installations has become a key variable affecting market expectations. It is reported that some new units originally planned for commissioning in the third quarter may be delayed until the fourth quarter, reflecting a more cautious approach by PET bottle chip producers toward adding new capacity in the current market environment. The actual impact of new supply is expected to be delayed until the fourth quarter.

On the export front, the recent appreciation trend of the RMB and the partial rebound in freight rates have made PET bottle chip producers more cautious in accepting export orders. As a result, overall order intake has not been aggressive, with average export sales in July and August totaling only around 400,000 tons. However, as current Chinese PET bottle chip export prices are at a periodical low, overseas buyers have reportedly increased their procurement activities. Given the large number of carry-over orders from earlier, actual export shipments in August are expected to continue exceeding new orders for the month, similar to the previous month. For instance, orders accepted in July were just slightly over 400,000 tons, while customs data showed shipments nearing 580,000 tons. Due to generally modest sales performance in recent months and a slight improvement in low-price transactions, export shipment speeds may decline slightly in September, while new orders are expected to gradually recover.

Considering current domestic and export shipment trends and the continuation of production cuts, total inventory dropped to around 2.74 million tons in August. For September, although total inventory is still expected to accumulate, the increase is projected to be only about 50,000 to 60,000 tons.