By Jiang Shunping, Calcium Carbide Industry Association of China

Polyester capacity is growing steadily, bottle-grade PET is developing rapidly, and polyester yarn accounts for the largest proportion

Polyester is a general term for polymers obtained by polycondensation of polyols and polyacids, mainly refers to polyethylene terephthalate (PET), and customarily includes polybutylene terephthalate (PBT) and linear thermoplastic resins such as polyarylate. It is a type of engineering plastics with excellent properties and a wide range of applications. Fiber-grade polyester chips are feedstock of polyester staple fibers and polyester filaments. With the most production, polyester occupies nearly 80% of the market share. It is also used in the manufacturing of bottles and films, which are widely applied in the packaging industry, electronic appliances, medical and health, construction, automobiles and other fields. Among them, packaging is the largest non-fiber market of polyester, and it is also the fastest growing PET market. Chart 1 shows the capacities of polyester products from 2015 to 2020.

Chart 1 Polyester products’ capacities, 2015-2020

   From 2015 to 2020, the highest average annual growth rate of domestic polyester products is polyester bottle chips, mainly due to the healthy development of domestic beverage market, followed by polyester filament yarn. The growths of polyester staple fiber, PET chips and filmsare slower. With the deepening of the supply-side reforms, the growth rate of polyester capacity has slowed down, and some backward capacities have been washed out of the market. By 2020, the total capacity of polyester is approximately 63.975 million t/a.
   Chart 2 shows the proportion of the capacities of polyester products in 2020. Polyester filament yarns accounted for 54%, being the highest, followed by polyester bottle chips, accounting for 18%; then polyester staple fiber 13%; fiber grade polyester chips 11%; and films 4%.

  Chart 2 Proportion of the capacities of polyester products in 2020

The capacities of domestic polyester are highly concentrated, mostly in East China

   China’s polyester capacity concentration is relatively high. The top seven manufacturers of polyester chips have occupied 44% market shares, and the capacities of top seven staple fiber producers account for nearly 50% of the total capacity, top seven bottle chips producers have reached 87% market shares, and the capacities of top seven polyester yarn manufacturers have reached 64%. At present, large polyester yarn companies include Shenghong, Xinfengming, Rongsheng, Hengli, Hengyi, and Tongkun. In the future, brand effect and large-scale development are important for enterprises to survive the market.

Due to Covid-19, the polyester market declined in 2020, while the profits were good

   Chart 3 shows the market trend of polyester products in 2020, which has fallen all the way. After the Spring Festival, due to the decline of crude oil and the epidemic, the prices of PTA and ethylene glycol decreased to new lows, and the polyester markets accelerated its decline, hitting a new low at the end of March. In the second and third quarters, the domestic polyester market as a whole was at the bottom, with limited overall increase. In early April, the polyester staple fiberonce upsurged, mainly because the non-woven polyester staple market was booming, and the price once rose to more than RMB10 000/t. The market then began to cool down in late April. From October to December, as textiles started the peak demand season, polyester production and sales improved, and the polyester market began to rebound steadily.

Chart 3 Polyester products’ market trends in 2020

   In the first quarter of 2020, the whole polyester industry chain fell to the bottom. PTA and ethylene glycol fell by 36% - 43%, while polyester products fell by only 23% - 34%. Therefore, the profits of polyesters increased substantially, up from nearly the profit/loss line to a RMB700 – 800/t. However, after March, the profit trends of different products began to differ. The increased decline of polyester filament yarn and polyester chips made their profits shrink sharply, and polyester filament yarn once fell into a loss. After October, as the polyester market rebounded, profitability improved significantly. In 2020, bottle chips’ profit has significantly improved, with producers’ profits rising by three times compared with the same period in 2019. The profits of staple fiber and PET chips have also increased by 60% compared with the same period in 2019. However, the overall profit of polyester filament yarn declined slightly.

Chart 4 Polyester products profits, 2019-2020

   In 2020, the comprehensive operating rate of polyesters was maintained at around 84%. Affected by the epidemic, the utilization of China’s polyester enterprises plummeted in January and February, and then began to slowly increase after March. The overall operating rate recovered to 89% in mid-June, close to the recent-year high. From June to December, the utilization continued to remain at 87% to 90%. Chart 5 shows the comprehensive operating rate of polyesters from 2017 to 2020.

Chart 5 Comprehensive operating rate of polyesters, 2017-2020

The polyester growth will be slowed down in the future

   In the next few years, China's polyester market will see a slow growth. Chart 6 shows the future polyester capacities from 2020 to 2023. It is estimated that during 2021 to 2023, the growth rate of China's polyester capacity will be below 5%, with bottle grade PET at about 10%; polyester filament at about 5%; and staple fiber and fiber grade PET at about 2%.

Chart 6 Polyester capacities, 2020-2023

   Bottle-grade PET: The market supply will continue to increase steadily. In 2021, China Resources Zhuhai’s 600 000 t/a plant and Baosheng Sichuan’s 500 000 t/a new line will be put into operation; in 2022 and 2023, the second phase of Wankai Chongqing’s 600 000 t/a will be put into production, and the Lanshan Tunhe’s 100 000 t/a new unit will also be launched. In the future, there will be more large-scale bottle chip plants, including Yisheng Petrochemical’s 2 million t/a project, Pan-Asia’s 1.2 million t/a project, Sanfangxiang’s 3 million t/a project, and Yizheng’s 500 000 t/a project.
   Fiber-grade PET: It is estimated that from 2021 to 2023, China's market will still be in a state of oversupply. During the period, Tianlong New Materials’ 200 000 t/a new line and Sanwei Fiber’s 200 000 t/a new unit will be put into production. In the future, the market shares of fiber-grade PET will be more concentrated to leading enterprises with integrated refining and chemical capabilities.
   Polyester staple fiber: The capacity will increase significantly. Although most of the new capacities will be differentiated products with strong competitiveness, due to the healthy profits in recent years and the high utilization, the future supply pressure would not be small. Downstream spinning mills still have more capacities to release, and hence staple fiber still shows a relatively healthy state.
   Polyester filament yarn: It is estimated that from 2021 to 2023, the new capacities will reach 10.35 million t/a, mainly from the leading manufacturers, and the growth will stabilize. Xinfengming Group will expand its capacity by 3.3 million t/a, Tongkun Group 2 million t/a, Hengyi Group 1.05 million t/a, and Hengli Group 2.3 million t/a. The industry concentration will further increase. At the same time, the downstream growth might slow down, leaving the future supply surplus a major problem.