August 4th, according to news from China,
I. Today's Market Performance
1. Chinese spot market
Polyethylene terephthalate (PET) bottle chips saw a slight rebound today, driven by the strengthening of crude oil and PTA. Low inventory levels supported factories in maintaining their prices, but the release of new production capacity and downstream buyers purchasing according to need limited the price increase. Overall, the cost-driven weak rebound resulted in light spot trading. According to price data, the mainstream large factories for water bottle grade: 7,400 to 7,600 CNY/ton; second-tier small and medium-sized factories: 7,300 to 7,350 CNY/ton. Today, factory quotations generally showed a slight increase of less than 50 yuan, with little differentiation in the price changes.
2. Futures market (bottle chip main contract PR)
Current price is 7,390 CNY/ton, increased by 92 yuan, a price increase of 1.25%; the intraday range is 7,310 to 7,484 yuan, it opened slightly higher and strengthened with fluctuations, trading volume increased, following the rebound of PTA in China.
3. Recent Stage Trend (Late July - Early August)
Overall, the market has been experiencing volatile bottom-building with a mild recovery: In mid-to-late July, prices fell as newly commissioned capacity came online and weakened demand. At the end of July, crude oil rebounded, driving up costs and halting the decline. In early August, prices fluctuated narrowly but tended to be stronger—this was a weak rebound driven by rising costs, while the underlying supply-and-demand fundamentals remained unchanged.
II. The Core Reason for the Upward Rebound
(1) Cost-side pull (the main reason for today’s rise)
Geopolitical disruptions in the international crude oil market have persisted, and oil prices halted their decline and rebounded last night. Market concerns over navigation risks in the Middle East have driven simultaneous strength in PTA and ethylene glycol (MEG), pushing up the cost center of polyester raw materials and prompting bottle chip prices to rise passively. The price declines in PTA spot and futures markets have narrowed, and prices have begun to rebound. Previously, bottle chip processing fees had been squeezed down to around 590 CNY per ton, a relatively low level. As a result, manufacturers’ willingness to hold prices has increased, and they are reluctant to continue lowering prices and selling off their inventory. Meanwhile, maintenance at some upstream PTA plants has tightened PTA supply, limiting the room for further declines in polyester raw material prices and providing cost support for bottle chips.
(2) Inventory pressure is low, and factories in China have no intention to actively clear out stock.
As of July 31, the inventory days of bottle chip factories were only 8.8 days, basically flat month-over-month. The overall inventory is healthy, with no crisis of inventory accumulation. Factories do not have the pressure to clear stock at low prices, and their quotations are relatively resilient.
(3) Peak season demand provides a solid base, with essential demand from China supporting it.
Currently, it is the traditional summer peak season for beverages, bottled water, and tea drinks. Downstream soft drink companies in China are operating at a high level of 80% to 90%, with continuous daily rigid purchases, preventing a deep price decline and providing a bottom support.
III. Negative factors suppressing price increases and making substantial rises difficult (the underlying nature of a weak market)
1. Supply continues to increase, and the looseness of supply is the greatest pressure.
New bottle flake production capacities from Fuhai, Kesen, Sanfangxiang, and other companies are being commissioned one after another. As a result, the industry’s operating rate has risen to 78.1% and continues to climb. By August, the industry’s operating rate is expected to approach 83%, further boosting supply and putting downward pressure on processing fees.
In July, the amount of plant maintenance decreased significantly. The dual effects of restarting old facilities and commissioning new capacities led to an overall shift from tight to loose supply. Even during the peak season, it is unlikely to see a situation where demand exceeds supply.
2. Downstream restocking is extremely cautious, and the peak season is not as strong as expected.
Beverage factories in China anticipate an increase in the supply of bottle chips and that prices will not continue to rise. They adhere to purchasing according to demand and acquiring small batches, refusing to stockpile large quantities in advance. This lack of concentrated restocking has prevented a rise in prices.
The downstream demand for edible oil bottles, sheets, and other products is weak in China, with oil bottle manufacturers operating at only about 65%, and overall diverse demand is insufficient.
Domestic beverage production fell 3.2% year-on-year in June, and consumption during the peak season grew at a slower pace than in previous years, resulting in limited growth in demand.
3. Export weakness, unable to divert China's excess supply
In June, 507,000 tons of bottle chips were exported, a decrease of 7.1% year-on-year. Overseas packaging demand was weak, and the increase in local PET production capacity overseas led to a reduction in export orders from China. The supply originally intended for export has flowed back into China, further exacerbating the supply pressure in China.
4. Profits are slim, and there is a lack of intrinsic industrial momentum to drive an increase.
Currently, the spot processing fee for bottle chips is only 590 CNY per ton, and the futures processing fee is 678 yuan, with meager profits, leaving factories without the confidence to raise prices; once raw material prices fall, bottle chips are likely to weaken again.
IV. Short-Term Market Forecast (Early August)
Overall pattern: The market will mainly fluctuate within a range, with neither significant increases nor deep declines, operating within the range of 7300–7650 CNY/ton in China.
Uplift ceiling: Constrained by the release of new production capacity, it will be challenging for processing fees to break through 700 yuan.
Downside support: Strong demand during the peak season + low inventory, limiting the room for a significant decline.
