Nearly 18 million tons of PTA production capacity shut down! Changes in the structure of the entire polyester and textile industry chain

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Recently, the domestic PTA (pure terephthalic acid) industry has witnessed an unprecedented collective reduction in production. According to official industry monitoring and corporate announcements, the 6.6 million tons per year PTA production facilities at Yisheng Petrochemical’s plants in Dalian, Ningbo, and Hainan are all shut down. Meanwhile, Yisheng New Materials’ 7.2 million tons per year production facility has been operating at 70% of its capacity since April 2nd. Coupled with the fact that key companies in the industry such as Hengli Petrochemical and Xinfengming have also implemented production cuts and maintenance plans, the total capacity shut down in China’s PTA industry amounts to nearly 18 million tons, accounting for over 15% of the country’s total production capacity. Thus, a wave of \"self-imposed production cuts\" that affects the entire industry has emerged. This production cut is not only an emergency measure taken by the industry to address severe losses; under policy guidance, it also significantly alters the supply and demand dynamics in the polyester industry chain, having a long-term impact on the survival and development of companies at various stages of this chain. It also aligns with the policies set by the Ministry of Industry and Information Technology aimed at reducing excessive competition in the PTA industry and promoting high-quality development. I. Driven by policy guidelines and market pressures, the PTA industry has embarked on a collective effort to save itself. As a key intermediate in the polyester industry chain, PTA serves as the basic raw material for producing polyester filaments, staple fibers, bottle-grade resin, films, and other products. The scale of its production capacity and the level of operation determine the stability of raw material supply for the fiber and textile industries; it also acts as an indicator of the healthy functioning of the entire industry chain. The shutdown of nearly 18 million tons of production capacity this time was not accidental; it was an inevitable outcome, driven by policy guidelines and an imbalance between market supply and demand, as a way for the industry to escape the situation where greater production led to greater losses. From the perspective of official policy guidelines, the Ministry of Industry and Information Technology has long been aware of the competitive intensification in the PTA industry. On October 29, 2025, the Raw Materials Industry Department of the Ministry of Industry and Information Technology, in collaboration with the China Petroleum and Chemical Industry Federation and the China Chemical Fiber Industry Association, organized leading enterprises such as Yisheng Petrochemical and Hengli Petrochemical to hold a symposium on the development of the PTA and bottle-grade polyester chip industries. It was required that these enterprises submit data on key aspects such as production capacity, output, and profitability, and measures to prevent excessive competition within the industry were proposed, thereby setting a direction for the optimization of production capacity and sustainable development of the industry. This large-scale production cut across the entire industry is a concrete manifestation of companies responding to policy calls and practicing industry self-discipline. From a market perspective, the capacity expansion in the PTA industry has accelerated in recent years. According to data from BaiChuan YingFu, China’s effective PTA production capacity increased from 46.69 million tons in 2019 to 84.28 million tons by 2024, with a compound annual growth rate of 12.5%. By August 2025, this figure had risen further to 91.35 million tons. Meanwhile, demand for polyester at the downstream end has grown slowly due to factors such as weak textile exports and sluggish consumer demand, resulting in an increasingly severe imbalance between supply and demand. Coupled with fluctuations in the price of upstream PX (p-xylene) and high energy costs, the processing fee for PTA has continued to decline. As of October 2025, the average processing fee was only 154 yuan per ton, remaining in the theoretical loss range for four consecutive months. The operations of most companies were below the break-even point for extended periods, and the industry’s capacity utilization rate dropped to historic lows; as a result, \"reducing production to save itself\" became the consensus among industry players. As the industry leader, Yisheng Petrochemicals (the world’s largest PTA producer with a total production capacity of 21.5 million tons, accounting for about 23% of the country’s total capacity) serves as an indicator for any reductions in production within the industry. The continuous shutdown of the 6.6 million-ton capacity plants at its three main facilities, along with the reduced operation of the 7.2 million-ton capacity plants, has directly led to a reduction in production within the industry. This also sends a clear signal: the PTA industry can no longer tolerate persistent overcapacity and inverted price levels. Only by reducing production on a large scale to balance supply and demand can prices be brought back to reasonable levels, thereby saving the industry’s viability. This is in full alignment with the policy guidelines set by the Ministry of Industry and Information Technology, which encourage the phasing out of outdated production capacities and support for technological upgrades. II. Chain reaction: A profound adjustment in the entire industrial chain. This collective shutdown of over 15% of production capacity is like a \"boulder\" thrown into the polyester industry chain, triggering chain reactions upstream and downstream that affect the entire process ranging from PTA and polyester to the final textile products. The reshuffling of the industry is accelerating, and its structure is being redefined. Based on official industry monitoring data and market trends, the specific impacts are as follows: (1) PTA market: Supply contraction and rising expectations of price and profit recovery. The reduction in production has directly reversed the imbalance between supply and demand in the PTA market, and the significant contraction in supply will help to quickly reduce the high levels of inventory in the market. According to data from Longzhong Information, in April, domestic PTA production was scheduled to be reduced by over 11 million tons, resulting in a supply reduction that exceeded expectations. The spot basis continued to strengthen, and the discount for delivery at major ports narrowed significantly, leading to an increasing expectation of a price rebound in the market. For PTA manufacturers, the rise in prices is expected to gradually improve the industry’s profitability, alleviate the pressure of long-term losses, and provide companies with a chance to catch their breath. At the same time, industry concentration will increase further; the current production cuts are expected to raise the CR5 figure for the PTA industry – namely, the share of capacity held by the top five companies – from 65% to over 75%. The market influence of these leading companies will thus be further strengthened. Companies will need to find a balance between reducing production to maintain prices and preserving their market share, and competition within the industry will continue to intensify. (II) Downstream polyester: Divergent cost pressures, increased pressure on small and medium-sized enterprises. As the core raw material for polyester manufacturers, the price fluctuations of PTA directly determine the production costs of polyester. The price increases resulting from this contraction in PTA supply will directly raise the production costs of polyester manufacturers. From the perspective of the industry landscape, large polyester manufacturers such as Hengli Petrochemical and Tongkun Shares are able to mitigate the pressure of rising costs to a certain extent, thanks to their scale advantages, long-term procurement agreements, and integrated refining and production capabilities ； Small and medium-sized polyester manufacturers, due to their weak bargaining power and small purchasing volumes, find it difficult to avoid the risk of rising raw material costs, which further reduces their profit margins. Some of these companies may face operational difficulties as a result of high costs, and the pace of industry restructuring will accelerate even further, with the trend of \"the strong getting stronger\" becoming increasingly evident. According to industry monitoring, the current capacity utilization rate in the polyester industry is around 83.32%. Due to high raw material costs and financial constraints, the recovery in production volume is slow, which further increases the operational pressures on small and medium-sized enterprises. (III) End-use textiles: Cost transmission is hindered, and export competitiveness is under pressure. As the final link in the industrial chain, end-use textile companies will bear directly the cost pressures resulting from rising prices of polyester products. Currently, the global textile market is highly competitive with insufficient orders from end-users; textile companies are unable to pass on all the additional costs to their downstream partners, which continues to squeeze their profit margins, putting their export competitiveness under severe strain. At the same time, the load in the downstream weaving industry was lower than in the same period, and weak demand further hindered the transfer of costs. Some small and medium-sized textile enterprises may be forced to reduce production or even shut down due to high costs and insufficient orders. The trend toward industry consolidation continues to intensify, pushing enterprises to transform towards higher-end products and differentiated offerings in order to cope with changes in the market. III. Industry Reflection: An Inevitable Warning of Capacity Mismatch and Homogeneous Competition The epic scale of production cuts in the PTA industry is essentially the inevitable outcome of a long-term mismatch between capacity expansion and growing demand from downstream sectors, as well as intensified homogeneous competition; it also serves as a warning for the entire polyester industry chain. Based on the spirit of the meetings held by the Ministry of Industry and Information Technology as well as official industry analyses, the core issues lie in two areas: first, there is a severe mismatch between capacity expansion and demand growth. Over the past few years, the PTA industry has seen a wave of large-scale capacity expansion, with many companies blindly building or expanding new large-scale production facilities. The rate of capacity growth far exceeded the demand for polyester in downstream industries, leading to an increasingly severe problem of overcapacity. This situation ultimately resulted in price wars and losses across the entire industry, which goes against the requirements set by the Ministry of Industry and Information Technology to prevent cutthroat competition and ensure the stable operation of the industry. Secondly, the product structure is highly homogeneous; most companies in the industry focus on conventional PTA products, with insufficient investment in high-end, differentiated products. This further intensifies market competition. In a context of weak demand, these companies lack core competitiveness and are forced to fall into a vicious cycle of competing on price. This also clarifies the core direction for the industry’s development: blindly expanding production capacity while ignoring demand alignment will ultimately only lead to vicious internal competition within the industry ； Only by responding to policy guidance, making rational investments, optimizing the capacity structure, and extending the industrial chain can sustainable development be achieved; this is also the core message conveyed at the Ministry of Industry and Information Technology’s symposium. IV. Future Outlook: Production cuts are not the end goal; high-quality development is the key direction. Whether this collective suspension of production capacity of nearly 18 million tons can truly reverse the decline in the PTA industry depends on the sustainability of these production cuts, the effectiveness of industry self-discipline, and the recovery of demand from downstream sectors. Based on the policy guidelines set by the Ministry of Industry and Information Technology as well as official industry forecasts, the industry is expected to follow a development pattern of short-term recovery followed by transformation in the medium to long term. In the short term, production cuts will quickly improve the supply-demand balance in the PTA market, driving prices to rebound temporarily and reducing the financial pressure on companies; as a result, the industry is expected to experience a temporary recovery. However, it is important to be cautious: if demand for polyester downstream and in the textile industry remains weak and consumer demand fails to recover, any price increases resulting from production cuts will not be sustainable. The industry could once again fall into a cycle of \"production cuts – price increases – resumption of production – price decreases,\" and this represents a key risk that the industry needs to address in the future. In the medium to long term, the PTA industry needs to address the issue of overcapacity fundamentally, under the guidance of relevant policies: firstly, it is necessary to strictly control the addition of new production capacity and phase out outdated facilities, in line with the Ministry of Industry and Information Technology’s call to optimize the capacity structure, thereby bringing the industry’s production capacity back to a rational level ； Second, companies should increase their investment in research and development, focus on producing high-end, differentiated PTA products, escape from homogeneous competition, and enhance their core competitiveness ； Third, extend the industrial chain by promoting coordinated development of “PTA-polyester-textiles” in order to enhance the risk resistance of the entire industrial chain ； Fourth, industry associations should strengthen self-regulation, guide enterprises to make rational investments and avoid reckless expansion, so as to jointly maintain the healthy development of the industry and implement the plans put forward by the Ministry of Industry and Information Technology to promote high-quality industrial development. For the entire polyester industry chain, this wave of production cuts represents a profound reshuffle within the sector, as well as an opportunity for transformation and upgrading. Under the influence of policies set by the Ministry of Industry and Information Technology, industry self-regulation, and the proactive transformation efforts of enterprises, only through coordinated actions by upstream and downstream stakeholders to optimize the supply-demand balance and promote industrial upgrading can the PTA industry overcome the challenges of excessive competition and achieve high-quality development. For each enterprise in the industrial chain, only by adapting to industry trends, responding to policy directions, and enhancing its core competitiveness can it establish a solid foothold in these changes and seize future development opportunities.