The Chinese PTA (Purified Terephthalic Acid) market has been dealing with an oversupply situation which pushed the prices down during early May 2024. This has led to a bleak overall trend, with producers struggling to sell their products despite production slowdowns. This downtrend was attributed to the overabundance and high supply inventory storage of PTA during this timeframe. While scheduled maintenance turnarounds and reduced import bids from traditional suppliers like the US and the Middle East did contribute to some production drops, they weren't enough to make a significant dent in the existing surplus. Despite production cuts, the existing inventory continues to outpace demand. This indicates that the market was likely oversupplied even before the recent slowdowns.

As per the recent assessment, the poor market performance for PTA has been witnessed in China since early April 2024 which continued till the first half of May 2024 to settle the PTA Ex-Qingdao prices dropped by 15% in just one month. The shift in downstream plastic and textile prioritization added another layer of negative sentiments. The downstream plastic makers seem to be prioritizing production of essential commodities resulting in buying less PTA for non-essential applications. This shift in priorities could be due to uncertainties surrounding the post-May Daybreak in China. Moreover, market participants have exhibited cautious purchasing behavior, further exacerbating the issue.

Even with reduced production, PTA producers face difficulties selling their products. Meanwhile, a recent drop in spot ethylene prices and a decline in upstream crude oil futures have further shaken market confidence. This overall uncertainty discourages buyers from committing to larger purchases. Meanwhile, the recent commencement of a large-scale PTA project by Sinopec Yizheng Chemical Fiber Co., Ltd. in Jiangsu Province boasts the largest single-unit production capacity in the world, which led to a significant increase in the supply of downstream plastic bottles, fibers, films, and packaging materials. Despite the several plant shutdowns due to turnaround season, the supply of PTA in China remained high during this timeframe due to excessive surplus. This includes Hengli Petrochemical - Unit 1 and Unit -2, Zhejiang Yisheng, Weilian Chemicals, and Jiangsu Honggang Petrochemical from 6th May 2024 till the next announcement.

As per ChemAnalyst, the PTA market in China is expected to rebound during June 2024 ahead of peak bottling season. During the peak season, beverage plants usually start expanding bottled water distribution channels, gradually transferring from distributors to end-users like supermarkets and retail stores.