When will PET bottle chip plants O/R rebound ？

As of last Friday (August 22, 2025), the average operating rate of domestic PET bottle chip plants was around 79.1%, marking the eighth consecutive week that the operating rate has remained slightly below 80%. Comparing the operating rates of PET bottle chip plants from 2020 to 2025 (based on designed capacity), the average operating rate of PET bottle chip plants in the same period of 2024 hit the second-lowest point since early 2020 by the end of July, while the low point in operating rate after production reductions and shutdowns in 2025 was notably within a relatively high range.

A closer look reveals that, excluding the three exceptional years of 2020-2022, the timing and extent of the operating rate declines in 2023 and 2024 were somewhat similar. Specifically, against the backdrop of substantial supply growth and rapidly compressed processing margins, the average operating rate of plants needed to drop sharply by 25-30% within a short period to essentially rescue or slightly improve product sales profitability. In 2023, supply increased significantly in August-September, with the operating rate hitting a low in early Q4. In 2024, supply began to grow rapidly in Q2, with monthly output exceeding 1.3 million tons in both April and May, followed by a low operating rate in Q3.

In 2025, although PET bottle chip plants implemented production reductions and shutdowns, the extent was smaller compared to previous periods, effectively trading time for space.

Chart 1: PET bottle chip plants operating rates in 2020-2025

So, is the low point of the operating rate for PET bottle chip plants in 2025 likely to stabilize around this level?

1. There is still 600,000 tons of new capacity planned for late Q3 and Q4. In September, Yisheng Hainan and Wankai Chongqing are expected to restart, while Yisheng Dalian may potentially reduce production. Currently, even if new production plans are delayed, the supply increase will still be considerable as previously idled capacity resumes. However, if plants can extend their production reduction and shutdown measures, market supply and demand conditions may improve.

2. As of now, there are no additional production reduction or shutdown plans. Recently, due to the need to fulfill monthly contract volumes, traders in some regions have reduced prices to promote sales, which could further intensify market competition and indirectly suppress any increase in plant operating rates.

3. It may also be unrealistic to expect a significant increase in the operating rate of PET bottle chip plants in Q4. On one hand, domestic processing margins have been suppressed below 400yuan/mt for an extended period, further squeezing the survival space of small and medium-sized enterprises. Given the prolonged expectation of losses, shutting down production might be a better option. On the other hand, intensified competition has extended to overseas markets, which could potentially compress the export share of PET bottle chip plants.

In summary, we believe that we have most likely already witnessed the lowest point of this round of concentrated production reductions and shutdowns, and the operating rate will likely remain around 80% in late Q3 and Q4. Specifically, the rate will hover around 79-79.5% in August and may briefly rebound to above 82% in September (though there is a possibility of some plants jumping the gun, leading to an earlier increase). After most of the new production capacity is realized, the average operating rate of domestic PET bottle chip plants is expected to have an opportunity to rebound to above 85% only in the mid-to-late part of Q4. However, considering the gradual softening of domestic demand by then, how long this rebound can last will depend on actual market conditions, such as whether prices fall to periodic lows or procurement volumes for the new year continue to expand. If procurement demand is mediocre at that time, the operating rate of PET bottle chip plants may decline again around the end of the year.