Asian PET market faces uncertainty as demand recovery lags

The outlook for Asian polyethylene terephthalate demand looks increasingly opaque, denting spot prices and margins and prompting producers to continue reducing operation rates in coming months, trade sources said.

Due to sluggish demand and rising stockpiles, most Chinese producers have recently reduced operating rates to around 70%.

"As we lower our operating rates, production costs rise," a market source said.

Weak margins and run rates are making operations unsustainable, prompting many producers to conduct turnarounds, sources said. A wave of planned maintenance is expected between March and May, including one by China's Zhejiang Wankai New Materials, which could temporarily ease supply pressure.

Concerns over oversupply in China continue to affect the PET market, with market participants wary that excess production could pressure prices and margins. Uncertainty remains over whether demand will strengthen as the peak season approaches.

"This year, the supply-demand pattern for bottle-grade PET is unfolding differently from previous years," said a Chinese trader, elaborating that the post-Lunar New Year recovery has been weaker than expected, leading to seasonal inventory accumulation in China.

Trade sources attributed weak buying interest to crude price volatility and the lingering impact of Trump-era tariffs, while increased spot availability kept buyers cautious, further slowing purchases.

Export demand from the beverage industry in coming months could be a key factor in balancing supply, market participants said.

China's PET expansion raises concerns

China's PET capacity expansion continues, with additional supply expected through 2025.

Approximately 2.4 million mt/year of new capacity came online in 2024, with production rising. While some market participants expect demand to pick up later in 2025 as buyers deplete inventories, others argue that persistent oversupply will continue to cap prices and margins.

"The demand outlook remains uncertain. While annual demand for bottle-grade PET is still expected to grow, rapid capacity expansion will undoubtedly pressure prices and production margins," said a Chinese PET market source.

Platts, part of S&P Global Commodity Insights, assessed FOB Northeast Asia bottle-grade PET prices at $795/mt on March 5, down $5/mt week over week, marking an 11% or $95/mt drop year over year.

Platts also assessed FOB Southeast Asia bottle-grade PET prices fell 9.4%, or $90/mt, over the same period to $870/mt on March 5.

PTA producers under stress

Upstream purified terephthalic acid producers remain anxious, hoping for improved PET demand.

The downstream polyester sector in China appears increasingly lackluster as domestic consumption patterns show little to no improvement, a PTA producer in the region said. "Market is very bad [as the] worldwide economic situation has [had a] negative impact on [the] polyester value chain."

China's PTA producers have had to consider shutting their plants for turnarounds over the next few months despite the peak summer demand season on the horizon, traders said.

Producers in China and the neighboring region remain hopeful for a demand recovery driven by seasonal factors.

"We are hoping that [the] nature of demand [has the] seasonal factor, such as [summer demand] for PET bottles," the PTA producer said.

Platts assessed PTA CFR China at $629/mt on March 11, down $4/mt from the previous day.