Introduction: During the first half of 2026, the domestic PTA market exhibited a pattern of wide-ranging fluctuations and phased divergence, with the core logic of the market trends revolving around the ongoing tug-of-war between external geopolitical cost shocks and the weak internal industry fundamentals. The primary driver of price volatility in H1 was tied to changes in the overseas geopolitical landscape, which directly triggered a revaluation of crude oil and upstream PX costs, thereby supporting the floor for PTA prices. Conversely, persistently weak downstream polyester end-user demand, seasonal inventory accumulation, and the reality of a fragile industry constrained the upside potential for prices, ultimately establishing a core equilibrium pattern characterized by "cost support limiting downside and demand capping upside."
I. PTA Spot Price and Futures-Spot Spread Trends
During the first half of the year, PTA prices exhibited phased differentiation in response to frequent shifts in geopolitical situations. From January to April, the continued escalation of geopolitical conflicts intensified volatility in crude oil and PX costs, which, combined with expectations of PX unit maintenance, pushed PTA prices upward in phases. Even though PTA unit maintenance curtailed supply, the seasonal production cuts in downstream polyester and persistently weak end-user demand led to continuous inventory buildup, restricting price gains and resulting in volatile swings. Starting in May, geopolitical risks gradually cooled, causing a significant pullback in the crude oil premium and a weakening of cost support. Combined with the drag from the traditional demand off-season, market confidence waned, and PTA prices trended lower. In June, the market continued to trade based on geopolitical drivers: an escalation in conflicts early in the month boosted costs and led to a price rebound, while the realization and pricing out of geopolitical positives in mid-to-late June, along with the concentrated restart of PTA units under maintenance and a lack of demand recovery, caused prices to peak and then decline. Looking at H1 as a whole, PTA prices were consistently dictated by external geopolitical cost factors in terms of directional moves, with industrial supply-demand fundamentals only playing a role in providing temporary support or capping prices. The overall market was characterized by volatility driven by external news events, with amplitude constrained by weak internal realities.
Based on nearly 1.3 million tons of continuous inventory buildup from January to April, warehouse warrant inventories were elevated. By May, tighter upstream supply, driven by the concentrated announcement of maintenance shutdowns, led to a rapid drawdown of warehouse warrant inventories. The spot basis shifted from backwardation to contango, and the industrial supply-demand structure moved from accumulation to destocking. By the end of June, warehouse warrants had fallen to 74,000 lots, a reduction of over 130,000 lots from the peak in H1.
II. Changes in PTA Supply in H1 2026
In the first half of 2026, PTA production reached 35.84 million tons, a decrease of 1.44 million tons month-on-month and an increase of 110,000 tons year-on-year. Considering the 8.7 million tons of new capacity added in 2025, which was concentrated in the second half of the year, and the fact that the Strait blockade tightened crude oil liquidity, leading to upstream and own unit maintenance, the production loss in H1 increased by nearly 4 million tons year-on-year. Consequently, total output contracted significantly month-on-month, with the capacity utilization rate falling to 71.71%, down 4.2 percentage points month-on-month and 7.4 percentage points year-on-year.
Looking at the past five years, over 44 million tons of new domestic PTA capacity have been brought online, resulting in severe overcapacity, with import dependency falling below 1%. It is estimated that PTA imports in H1 amounted to approximately 5,500 tons, a decrease of 9,000 tons year-on-year.
III. Changes in PTA Consumption in H1 2026
In the first half of 2026, profit margins along the polyester chain diverged. Geopolitical factors tightened crude oil liquidity, significantly squeezing PX margins via naphtha. PX experienced sustained losses from March to May, which gradually recovered in June. PTA itself operated in a squeezed environment, with processing fees only gradually recovering to over 600 yuan/ton by May. In the downstream polyester industry, profits for polyester filament yarn and PET bottle chip were good, with average monthly profits for PET bottle chip exceeding 1,000 yuan/ton at one point. Polyester filament yarn benefited from sustained and deepened production cuts, totaling 35%-40%, with operating rates falling from 88% to around 74%. PET bottle chip also reduced operating rates, maintaining them at around 70%. Although operating rates for polyester staple fiber and polyester chip were also reduced, they remained in loss territory for an extended period due to the drag from weak end-user demand.
By the end of June, on the polyester raw material side, capacity utilization rates for PX and PTA had fallen by 9.8 and 15.3 percentage points, respectively. Capacity utilization rates for all downstream polyester products were below pre-conflict levels: polyester filament yarn, polyester staple fiber, PET bottle chip, and polyester chip decreased by 16, 12.4, 10.7, and 2.3 percentage points year-on-year, respectively.
Profit margins differentiated across the polyester chain products. Considering that geopolitical risks amplified costs and the slow recovery of demand after the Chinese New Year, the polyester industry continued and subsequently deepened production cuts to restore and protect cash flow. Starting from February 5th, the weighted average profit for the polyester chain turned positive and remained profitable for 21 consecutive weeks. However, based on high costs and weak demand, the downward price transmission along the chain was hindered. Demand for downstream polyester and weaving remained weak, with monthly consumption continuing at low levels. The comprehensive monthly capacity utilization rate for the polyester industry fell from 84.7% to 78.2%, a decrease of 6.5 percentage points.
IV. Changes in PTA Supply-Demand Balance in H1 2026
Actual PTA production and imports in H1 were lower than expected. Geopolitical risks tightened crude oil liquidity, causing PX-PTA units to undergo maintenance and delay restarts. Additionally, unplanned production losses increased. From April to June, actual PTA supply was 340,000 to 960,000 tons per month lower than the expectations set in February, and this gap widened compared to the forecast from April (120,000 to 580,000 tons per month lower).
Due to the hindered downward transmission of high costs, actual demand in June H1 also declined compared to forecasts from the end of February and April. From April to June, actual PTA consumption was 440,000 to 540,000 tons per month lower than the expectations set in February, and this gap also widened compared to the forecast from April (230,000 to 340,000 tons per month lower).
In the first half of 2026, the PTA supply-demand balance showed continuous inventory accumulation for four consecutive months. Accumulation exceeded 1.2 million tons in February-March. From May to June, the release of concentrated maintenance plans shifted the market to destocking, with actual cumulative destocking exceeding 1 million tons, surpassing the April forecast of 810,000 tons. In March-April, excluding geopolitical risk factors, the industrial supply-demand balance shifted from accumulation to equilibrium, providing positive support to prices, with market prices reaching a peak in April. Actual destocking from May to June exceeded 1 million tons, surpassing expectations from April. However, as geopolitical risks were gradually priced out and crude oil gave back its premium, domestic refineries continued to incur losses, and unit shutdowns/reductions increased further. Despite ongoing industrial destocking, it was unable to outweigh the logic of cost recession, and market prices fell.
V. PTA Supply-Demand Balance and Price Forecast for H2 2025/2026 (Note: The original text says "下半年" which I assume means H2 2026 based on context, but it writes "2026" in the heading, so I keep as 2026. Also note the figures reference might be for 2026, so H2 of 2026)
Based on supply-demand data, as crude oil fell to pre-conflict levels and transit through the Strait continued to improve, the cost-side pressure became evident. Considering the tight upstream supply and limited imports, multiple PTA units are scheduled for maintenance in July, with relatively long cycles. This month is expected to have the largest negative supply-demand gap in H2. From August to December, units that previously shut down are expected to restart, leading to a looser supply situation. The return of the supply-demand gap to positive territory will exert downward pressure on prices, with the PTA market price potentially falling back to around 5,900 yuan/ton.
From an industry inventory perspective, due to tight raw material supply, the restart of existing units continues to be delayed. New unit maintenance in July will exceed 10 million tons of capacity. It is expected that inventories will drop below the May low by mid-July, with continued destocking anticipated. Low inventory levels will tighten spot market liquidity, potentially enhancing price resilience and supporting the spot basis. After September, the traditional peak season in the industry may boost demand. However, with both supply and demand likely to rise, the industrial supply-demand balance may return to a tight equilibrium, creating occasional mismatches and opportunities for market price negotiations.
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