Last week (July 6–10), the market for PET bottle chips exhibited a pattern of rising followed by a pullback, characterized by narrow-range fluctuations and a corrective trend. The average weekly spot price for water-grade chips in East China was 7,031 RMB/tonne, a slight week-on-week increase of 0.40%. Early in the week, cost support—driven by crude oil, PX, and concentrated maintenance at PTA plants—combined with earlier low prices stimulating some essential downstream restocking, pushed spot prices up from lows of 6,850–6,900 RMB/tonne. Mid-week, manufacturers raised offers by 50–100 RMB/tonne, and the mainstream transaction price range climbed to 7,080–7,250 RMB/tonne. However, with overall market supply remaining ample and downstream beverage manufacturers having largely completed their peak-season stockpiling, willingness to accept higher prices was weak, causing trading activity to gradually cool. Bottle chip futures initially fluctuated upward but fell sharply on Friday, closing the week down 3.89%; this dragged down spot market sentiment, causing the mainstream transaction price range to retreat to 7,000–7,150 RMB/tonne by Friday. Positive cost-side factors failed to reverse the weak supply-demand dynamic, limiting the extent of the rebound, and the market returned to a trend of weak fluctuation by the end of the week.

I. Overall Trend (East China Water-Grade Spot Price, Tax-Inclusive)

1. Average Weekly Spot Price: 7,031 RMB/tonne, a slight week-on-week increase of 0.40%. This marked the end of the steep decline seen in late June, shifting to a narrow-range rebound characterized by initial corrective fluctuation, a mid-week slight rise, and a late-week weakening of spot prices dragged down by futures. Weekly Price Range: Monday lows of 6,850–6,900 RMB/tonne; mid-week offers from major manufacturers rose by 50–100 RMB/tonne, with mainstream transactions at 7,080–7,250 RMB/tonne; Friday saw a futures pullback, with the mainstream ex-factory transaction price range retreating to 7,000–7,150 RMB/tonne. Export FOB: $940–965/tonne in East China and $935–960/tonne in South China. Export quotes rose slightly in tandem, though concessions increased during actual deal negotiations.

2. Futures Market (PET Bottle Chip Futures – Main Contract)

The market closed lower overall last week; it settled at 6,812 RMB on Friday, down 82 points (1.20%) for the day and 3.89% for the week. Futures underperformed the spot market, and the spread between futures and spot prices continued to widen, capping the potential for significant gains in spot prices.

II. Breakdown of Key Drivers

1. Cost Side: Shifted from strong to weak; crude oil and PX provided periodic support at the low end.

Early in the week, geopolitical tensions repeatedly drove up oil prices; concentrated maintenance on PX units and low operating rates in Asia raised naphtha and PX costs, providing support to PTA. By Friday, however, market expectations of easing geopolitical tensions caused crude oil prices to weaken and the rally in upstream raw materials to fade, marginally reducing cost support.

PTA (Key raw material for bottle chips)

Multiple PTA units underwent maintenance in July, pushing the industry operating rate to a multi-year low and strengthening the spot basis. However, PTA futures fell sharply by 2.15% on Friday, spot processing margins retreated, and support from the raw material side declined rapidly.

MEG (Monoethylene Glycol)

Prices fluctuated with an upward bias last week, closing at 4,186 RMB on Friday (up 1.55%). This slightly offset the cost impact of PTA's weakness, but the overall gain was limited and insufficient to reverse expectations of a weakening cost environment.

Bottle Chip Processing Margins

Spot processing margins held steady at 590–615 RMB/tonne but narrowed slightly during the week. Upstream raw material costs squeezed production margins, leaving factories with little appetite for aggressive price hikes.

2. Supply Side: Loose supply pattern persists; rebound potential is limited.

The industry operating rate remained stable at 72.5%. Multiple units in Sichuan, Jiangyin, and Shandong—previously under maintenance—continued to restart and feed in raw materials, while new capacity was gradually released, leading to a steady increase in spot market supply. Only a few units underwent short-term maintenance; the capacity restarting far exceeded the capacity going offline for maintenance. Factory inventory levels stand at 10.61 days of supply, a slight month-on-month decrease of 0.13 days. Inventory reduction is slow, and stock levels remain on the high side of neutral; factories face persistent pressure to move goods and show little willingness to sell at higher prices. Recycled PET flakes are under similar pressure; low prices for recycled feedstock are siphoning off demand from the low-end virgin PET flake market, further suppressing the potential for virgin flake price increases.

3. Demand Side: Lackluster peak season; supported only by essential needs; weak momentum for chasing price hikes

Domestic Beverage Sector

July is traditionally a peak season for beverages, but downstream preform manufacturers and water bottling plants had already secured long-term contracts for July and August, resulting in ample inventories. Following a slight price rebound last week, downstream buyers resisted high prices, limiting purchases to immediate needs; large-scale restocking was rare, and the industry's overall production-to-sales ratio remained low.

Domestic soft drink production rose only 0.4% year-on-year from January to May; terminal consumption growth fell short of expectations, and the peak season's stimulus effect was weaker than in previous years.

Export Demand

PET flake exports grew only 0.2% year-on-year from January to May. The commissioning of local PET capacity in Southeast Asia, combined with rising shipping costs and sluggish overseas demand, limited the growth of export orders, failing to effectively absorb the domestic supply surplus.

Other Downstream Sectors (Sheet/Film, Personal Care/Household Packaging)

Demand remained stable with no growth; orders consisted mainly of small, short-term contracts, with no signs of concentrated stockpiling.

III. Market Outlook for the Week (July 13–17)

Price Trend: Overall fluctuation with a bearish bias; spot prices may retreat to the 6,900–7,050 RMB/tonne range, while futures prices remain under pressure.

Cost Side: Expectations of easing geopolitical tensions are rising, putting downward pressure on crude oil, PX, and PTA prices, thereby gradually weakening cost support.

Supply Side: Restarted production units are ramping up output, pushing industry operating rates higher; spot supply is increasing, making inventory reduction more difficult.

Demand Side: Downstream long-term contract stockpiling is complete, and there are no plans for concentrated restocking; purchasing is limited to immediate needs, with insufficient appetite for high prices; export demand is unlikely to see significant improvement.

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