Why is BDO capacity expansion in China creating such severe oversupply and what does it mean for prices?

Why is BDO capacity expansion in China creating such severe oversupply and what does it mean for prices?
China's BDO market is in a deep structural oversupply. By end-2025, domestic capacity reached 5.46 million tons per year, but output was only 3.08 million tons, putting the industry-wide operating rate at just 56%. This overhang stems from a decade-long investment wave: planned and under-construction capacity once totaled over 25 million tons, versus actual capacity of just over 2 million tons in the early 2020s. Most of those projects never materialized, but enough did to flood the market. The result is intense price competition, with producers operating below breakeven. The situation is worsened by the fact that many new plants are integrated with downstream PBAT or PTMEG units, meaning even loss-making BDO production may continue to support downstream supply chains.