SunSirs : Global Polyester Industry: European Capacity Exit vs. Accelerated Overseas Expansion of the Chinese Supply Chain

I. Overview of Two Key Industry Events

(A) Established European Chemical Company Shuts Down Polyester Operations for Coatings and Adhesives

On June 18, an overseas specialty chemicals company announced the permanent closure of its global saturated polyester resin production capacity by April 2027. The affected facilities span both Germany and China. After enduring years of losses and failing to sell the assets over the course of a year, the company opted for a complete exit. The products being discontinued are saturated polyesters specifically used for coil coatings, automotive paints, and hot-melt adhesives—distinct from textile-grade PET polyester.

Primary reasons for the exit: Persistently high costs for natural gas and electricity in Europe, the ongoing relocation of local end-manufacturing industries, and the overwhelming cost-performance advantage of Asian polyester products rendered the overseas segment consistently unprofitable. During the same period, multiple European and American chemical companies have divested low-margin capacities related to resins and chemical fibers; the European chemical sector has entered a cycle of sustained capacity rationalization, while the global polyester industry's center of gravity continues to shift eastward.

(B) Accelerated Overseas Expansion of China’s Integrated Polyester Supply Chain

China has established itself as the world's largest producer and exporter of PX, PTA, polyester chips, and polyester fiber. It accounts for over 70% of global PTA capacity and 50% of global trade volume in PET bottle chips, with export volumes of polyester staple fiber and filament growing year by year. Leveraging integrated refining and chemical parks, low-cost supporting infrastructure, and comprehensive upstream-downstream industrial clusters, the global competitiveness of Chinese polyester products continues to rise.

Overseas expansion is proceeding in tandem with the refinement of cross-border trade pricing mechanisms, allowing companies to capture greater global market share through spot-basis trading models. India, Southeast Asia, and North Africa have become key export destinations for Chinese polyester products. Meanwhile, the exit of European production capacity has created significant room for imports, providing long-term support for increased Chinese exports. However, the gradual commissioning of new local polyester capacity in Southeast Asia and India introduces a competitive counter-force, intensifying the dynamic interplay of supply and demand both within and outside the industry. II. Benchmark Prices Across the Industry Chain on June 29 (Source: SunSirs; Comparison with June 1)

1. Upstream Basic Raw Materials (Crude Oil-Derived)

PX (Paraxylene)

June 29 mainstream market transaction price: 8,920 RMB/ton; June 1 benchmark: 9,760 RMB/ton (monthly decline of 8.61%). The geopolitical premium faded as US-Iran tensions eased, causing international crude oil and naphtha prices to fall in tandem and shifting the PX cost base downward; additionally, the gradual conclusion of maintenance at Asian refineries increased market supply.

MEG (Monoethylene Glycol)

June 29 SunSirs benchmark: 4,460 RMB/ton; June 1 benchmark: 4,770 RMB/ton (monthly decline of 6.50%). Shipping routes in the Middle East gradually resumed, leading to increased arrivals of overseas ethylene-based MEG; domestic coal-to-MEG plant operations remained stable, while port inventories saw a slow recovery.

 Benzene (Core Raw Material for Coatings and Polyester)

June 29 composite benchmark: 6,170 RMB/ton; June 1: 7,418 RMB/ton (sharp monthly decline of 16.83%). Aromatics generally weakened in line with crude oil; concentrated production restarts at refineries resulted in ample market supply.

2. Polyester Intermediate Raw Materials

PTA

June 29 East China average spot price: 5,084 RMB/ton; June 1: 4,965 RMB/ton (slight monthly rise of 2.40%). Costs rose in the first ten days of the month driven by high PX prices, while a crude oil pullback weighed on prices later in the month; however, concentrated maintenance at domestic plants tightened supply, limiting the decline compared to upstream PX.

3. Downstream Polyester Finished Products (Textile-Grade PET)

Polyester Bottle Chips

June 29 mainstream negotiated price: 8,120 RMB/ton; June 1: 8,370 RMB/ton (monthly decline of 2.99%). It was the off-season for beverage packaging; downstream buyers purchased on an as-needed basis, with no significant restocking activity. Polyester Staple Fiber (1.4D)

Average price on June 29: 6,736 RMB/ton; June average: 6,510 RMB/ton (monthly rise of 3.47%). Declining costs cushioned the pressure of the off-season, while export orders provided slight support.

Polyester Filament Yarn (POY)

Market average price on June 29: 7,550 RMB/ton; June 1 price: 7,820 RMB/ton (monthly drop of 3.45%). Weaving mills reduced operating rates due to the off-season, leading to contracted raw material procurement.

4. Raw materials for saturated polyester coatings (upstream of specialty polyester)

Adipic acid: 9,450 v on June 29 vs. 9,830 RMB/ton at the start of the month (monthly drop of 3.87%); overcapacity persists.

Neopentyl glycol: Spot price 8,820 RMB/ton vs. 9,100 RMB/ton at the start of the month (monthly drop of 3.07%); supply increased following the completion of plant maintenance.

III. Comprehensive market dynamics for domestic polyester spot goods as of June 29 (broken down by two major categories)

(I) Textile-grade PET polyester (PTA + Ethylene Glycol route; bottle chips / filament & staple fiber)

1. Upstream cost transmission logic: Crude oil prices fell, causing a synchronized weakening across the supply chain from top to bottom.

Complete transmission chain: Crude oil → Naphtha → PX → PTA → PET polyester/bottle chips.

The US and Iran reached an agreement on a 60-day shipping permit, realizing expectations for the resumption of shipping through the Strait of Hormuz; the geopolitical premium on crude oil was largely eliminated. Naphtha and PX prices fell in tandem, directly lowering PTA production costs; ethylene glycol prices also declined, tracking overseas ethylene prices.

Supply chain characteristics: Upstream sectors saw the steepest declines. Midstream PTA saw a narrower decline due to supply support from plant maintenance. Downstream bottle chips and filament yarns were dragged down by the off-season and lacked any pricing power, resulting in a pattern where raw material prices plummeted while finished product prices fell only slightly, continuously squeezing processing margins. 2. Supply Side: High domestic capacity; periodic supply tightening due to maintenance

There is no new domestic PTA capacity scheduled for 2026; however, several units underwent planned rate reductions and maintenance in June, causing a short-term contraction in circulating supply that partially offset the bearish impact of falling PX prices. Domestic coal-based MEG capacity remained stable, while overseas imports gradually increased; port inventories saw a slight buildup, and supply pressure began to emerge.

Overall polyester plant operating rates held in the 78%–82% range—a significant drop from the year's highs—as the off-season for downstream weaving and packaging forced upstream producers to cut output; inventories of finished goods continued to accumulate slightly.

3. Demand Side: Domestic off-season; exports provide the only buffer

Domestic Demand: The textile/apparel and beverage packaging sectors entered their traditional summer off-season. Downstream weaving mills and bottle-blowing enterprises continued to strictly control raw material inventories, purchasing only as needed rather than stockpiling large quantities. Demand for real estate-related coatings and chemical fiber home textiles was similarly sluggish.

External Demand: With large-scale closures of European polyester capacity looming for 2027, import demand for overseas coil coatings, hot-melt adhesives, and textile products has risen. Meanwhile, the expansion of textile and apparel industries in Southeast Asia and India has driven continued procurement of domestic staple fiber, filament, and bottle-grade chips; export volumes maintained year-on-year growth, helping to offset weak domestic demand.

Daily Trading (June 29): Market inquiries were lackluster; traders offered price concessions to move stock. Transactions were limited to a few long-term export orders for filament and staple fiber, with sporadic spot orders and generally quiet overall trading activity.

(II) Saturated Polyester for Coatings/Adhesives (Overseas closures of similar products)

1. Cost Logic:  benzene, adipic acid, and neopentyl glycol weakened in tandem, leading to a significant drop in raw material costs.

This type of polyester relies on adipic acid and neopentyl glycol—derivatives of  benzene—as core raw materials. In June, prices across the aromatics and diol series saw a sharp correction, significantly lowering production costs for coating-grade polyester. However, due to the off-season in the downstream coil coating and automotive refinish paint sectors, coating plants operated at low rates, and the drop in raw material prices failed to trigger any concentrated purchasing. 2. Divergence in Domestic and Overseas Supply and Demand

Overseas: European production capacity for this category is set to exit permanently, creating a significant supply gap in overseas markets post-2027 and fostering a positive outlook for long-term export orders; however, the overseas downstream sector is currently in a seasonal lull, limiting the growth of inquiries.

Domestic: Saturated polyester capacity is abundant, leading to fierce, homogenized competition; following a drop in raw material costs, the industry has lowered prices to move inventory, resulting in razor-thin processing margins; only high-end, weather-resistant coil-coating polyesters command a premium, while quotes for general-purpose grades remain under pressure.

IV. Overall Global Polyester Market Landscape

Three-Way Divergence in Overseas Markets

Europe: High energy costs suppress long-term competitiveness; capacity for coating-grade polyester is shutting down permanently, and operating rates for chemical-fiber polyester plants remain low; the local supply-demand gap is widening, necessitating long-term reliance on Asian imports and creating export opportunities for domestic products.

Southeast Asia & India: Continuous construction of integrated PTA and polyester capacity aims for local self-sufficiency in the medium-to-long term, diverting market share away from Chinese exports; however, incomplete local supply chains in the short term mean significant imports of Chinese polyester raw materials and finished products continue.

Middle East: Leveraging low-cost naphtha to expand PX and ethylene capacity; increasing export volumes of ethylene glycol and PX are gradually being released, exerting long-term downward pressure on global polyester raw material price benchmarks.

Domestic Market: Core Strengths and Pressures

Strengths: Fully integrated industry chain (refining–aromatics–polyester–spinning) creating a complete closed loop; energy, logistics, and scale-related costs are far lower than in Europe or the US; overseas capacity exits provide short-term export dividends, with steady growth in long-term overseas contracts.

Pressures: 1. Summer is the traditional off-season for domestic end-market demand, with no short-term recovery; 2. New capacity in Southeast Asia and India poses long-term competitive threats; 3. Despite a short-term pullback in crude oil prices, long-term shipping and geopolitical uncertainties in the Middle East persist, maintaining the risk of raw material price volatility.

V. Layered Analysis of Price Transmission Across the Upstream and Downstream

Layer 1: Energy Sector (Crude Oil, Naphtha)

Easing US-Iran tensions have dampened geopolitical risk premiums, causing oil prices to retreat from highs; naphtha prices have followed suit, directly suppressing the two key aromatic raw materials—PX and  benzene—serving as the root cause of the downward price trend across the entire industry chain this month. Tier 2: Aromatics and Glycol Feedstocks (PX,  Benzene, MEG, Adipic Acid)

PX saw the sharpest decline, though the drop narrowed due to support from domestic PTA plant maintenance;  Benzene weakened significantly as refineries resumed production en masse, driving down prices across the board for coating-grade polyester feedstocks; MEG prices saw a steady pullback amidst rising overseas supply.

Tier 3: Midstream Polyester Intermediates (PTA, Saturated Polyester Resin)

Costs declined in tandem, yet PTA prices showed relative resilience thanks to supply constraints from maintenance; conversely, the coating-grade polyester sector suffers from overcapacity, with prices fully reflecting feedstock cost reductions and no momentum to hold price levels.

Tier 4: Downstream End-Markets (Polyester Filament & Staple Fiber, PET Bottle Chips, Industrial Coatings)

With end-market consumption in the off-season and demand elasticity extremely low, the drop in upstream feedstock costs failed to translate into price hikes for finished goods; prices merely edged down slightly. Profits continue to shift toward the upstream feedstock segment, leaving mid- and downstream processing enterprises operating with generally thin margins.

Structural Divergence (Textile-grade Polyester vs. Coating-grade Polyester)

Textile-grade PET benefits from larger global demand and stronger export buffers, resulting in relatively moderate price volatility; while the future exit of overseas capacity for coating-grade saturated polyester offers long-term upside potential, short-term domestic overcapacity and off-season headwinds keep prices weak—though this favors long-term export orders.

VI. Phased Market Outlook

Short-term (Late June – Mid-July)

Crude oil prices remain weak, leaving room for further declines in PX, Benzene, and MEG, while costs for various polyester products continue to trend downward. Coupled with the ongoing domestic off-season, prices for PET bottle chips, polyester filament, and coating-grade polyester are expected to fluctuate at low levels.

Supporting Factors: Anticipated export opportunities arising from the future exit of European capacity and supply tightening due to periodic PTA maintenance limit the scope for deep price drops.

Reference Price Ranges: PTA 4,900–5,200 RMB/ton; Polyester Staple Fiber 6,600–6,900 RMB/ton; PET Bottle Chips 8,000–8,300 RMB/ton. Medium Term (Late July – September)

Demand Side: Stocking for the autumn/winter textile and apparel season is gradually getting underway; the peak season for beverages is seeing a slight recovery; autumn engineering orders in the coatings industry are increasing; and essential demand for polyester is showing marginal improvement.

Supply Side: PTA units undergoing maintenance are gradually restarting; arrivals of PX and ethylene glycol from the Middle East continue to rise; and ample raw material supplies are capping the potential for price increases.

Overseas Variables: Expectations of plant shutdowns in Europe are materializing; overseas buyers are locking in supplies early; and increased domestic polyester exports are being realized, creating a window for a periodic market recovery.

Long Term (Second Half of the Year through 2027)

Supply Landscape: The permanent exit of European polyester capacity for coatings creates a long-term import gap, sustaining export benefits for related domestic products; meanwhile, new polyester capacity in Southeast Asia and India is gradually coming online, diverting export market share over the long term.

Cost Drivers: Supply dynamics of Middle Eastern crude oil and naphtha determine the baseline price levels for PX and ethylene glycol, while recurring geopolitical tensions will cause periodic fluctuations in raw material costs.

Industry Trends: Domestic polyester players continue to advance vertical integration across the entire supply chain and expand their global footprint, leveraging cost advantages to secure a core position in global supply; the market is expected to exhibit a range-bound pattern—characterized by weakness during off-seasons and rebounds during stocking periods—without experiencing significant, sustained rallies or collapses.

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