India's PTA demand grows in 2024 as buyers look beyond Chinese supplies

India's purified terephthalic acid demand rose around 12% in 2024 as buyers diversified supply sources, while strict import policies curbed cheaper Chinese inflows, sources told S&P Global Commodity Insights.

Over January-November 2024, India's PTA imports totaled around 1.78 million mt, compared with 1.59 million mt the previous year, customs data showed, with the majority sourced from Taiwan, Indonesia, Malaysia, Thailand and South Korea.

In 2022 and 2023, Thailand supplied around 21% of India's PTA, but the share grew to around 30% in 2024 as of November, according to the data. Meanwhile, South Korea's share in India's PTA purchases rose to around 10% in 2024, from 9% in 2023 and zero in 2022.

Since the implementation of the Bureau of Indian Standards norms in 2023, Chinese PTA supplies to India have continued to decline year over year, sources said.

A recent change in the BIS policy in 2024 allowed buyers in India to source PTA from non-BIS producers like China, on the condition that the finished products must be re-exported within six months. However, despite the policy change, there has been no significant increase in Chinese PTA imports, Indian sources said.

In 2022, Chinese PTA accounted for around 57% of India's total imports, but this share dropped to 44% in 2023 and has more than halved to around 21% by November 2024, customs data showed. India's import data for December 2024 has yet to be published.

Cheaper shipping rates and a shift to breakbulk shipments for domestic buyers have helped boost supplies from Southeast Asia.

"Over October-November, when freight rates and container unavailability started rising from all origins in Asia to India, freight from Thailand was still on the lower side, comparatively, which supported higher supplies from there," an India-based PTA buyer said.

"Consistent unavailability of containers and vessels over October-November as well as very high container freight rates led to a pile-up of inventory at ports and pushed India-based buyers to opt for breakbulk vessels for shipping," another India-based PTA buyer said.

China's PTA exports falter

As India's PTA import demand shrank, China bore the brunt of the decline, according to sources.

China's PTA exports in December fell about 40% month over month to 257,886 mt, according to China Customs Statistics.

In addition to India, Turkey's PTA import demand also shrank, further hurting Chinese exports, according to a trader in China. "Statistically, less is being exported to Turkey and India," the trader said.

Market participants in China were shaken by the double blow of weak PTA imports from both Turkey and India.

The start of Turkey's domestic PTA production is also expected to reduce Chinese exports, prompting producers in China to seek alternative markets, including Latin America, the trader said.

"Argentina is normal, [but] other South American countries are less common and in smaller quantities," the trader said, referring to December Chinese PTA exports to Latin America.

India's downstream sector buoyant

Demand for polyester from the yarn segment, particularly in India, has been supportive for PTA buyers, according to sources.

"In the last couple of months of the previous year, polyester run rates were stable at around 80%-85%, which is better than 74% heard earlier in the year," an India-based market source said.

Indian demand for fabrics is no longer concentrated around key festivals, allowing production levels to remain steady throughout the year, according to Indian sources.

Furthermore, market sources said the appeal of polyester exports has diminished due to abundant, cheaper global supplies, which in turn has squeezed margins for Indian producers.

With cheaper Chinese PTA continuing to flow globally, PTA producers in Asia are relying on India's demand, an Asian producer said.

However, the optimism for Asian producers may be short-lived as India plans to increase its PTA capacities by around 4 million-5 million mt over the next few years, according to traders.

"Once India's new PTA plants are up in the next two to three years, all these exporting countries will be facing a tough time," a trader in Singapore said.