PX/PTA 2026 Annual Outlook & Strategy

**Views** Macroeconomic factors saw heightened U.S.-China trade tensions in H1 2025 under the Trump administration, impacting textile and apparel exports. However, domestic stimulus measures bolstered consumption, with Jan-Oct apparel sales up 3.5% YoY. For 2026, stabilized trade relations post-November U.S.-China agreements, Fed rate cuts, and U.S. wholesaler restocking are expected to support export recovery.

**PX**: Domestic output and demand will rise in 2026, while imports may decline due to overseas plant maintenance and Indian PTA capacity additions. Supply-demand dynamics point to inventory drawdowns, with tight H1 balances easing to equilibrium in H2 as new plants come online.

**PTA**: Despite no new capacity, high utilization of existing facilities will drive output growth matching polyester production expansion. Exports face pressure from overseas startups, leading to inventory depletion. Seasonally, Q1 builds stocks, Q2 draws down during maintenance, and Q3-Q4 sees balanced supply.

**Strategies** PX to remain strong in Q1 amid pre-gasoline season stocking and Q2 maintenance, with PXN spread at $220-300/ton—buy on dips. PTA processing margins may range ¥250-300/ton; accumulate below ¥250/ton. In H2, PXN could correct to $200-250/ton as new PX capacity weakens blending demand, while PTA margins recover to ¥270-350/ton.

Crude oil may oscillate between $55-65/bbl in H1 amid muted price drivers, supporting PX at ¥6,200-7,000/ton and PTA at ¥4,300-5,000/ton.

**MEG** **Views** 2026 brings concentrated MEG capacity launches (mainly H2), outpacing demand growth and leading to inventory builds—peaking in Q1/Q4 with draws during Q2 maintenance and Q3 seasonal demand.

**Strategies** With weak cost support, MEG prices may test lows (¥3,500-4,200/ton range) as coal-based units’ low costs limit downside. Q2-Q3 could see rebounds capped by new supply. Spread trade: short MEG/long LL in H1, as LL capacity surges in H2.

**Annual Recap** 2025 saw PX margins dominate amid high industry concentration, while PTA processing fees compressed under expansion pressure. Polyester output rose 9.54% Jan-Oct, led by fiber and bottle chip segments. Exports grew 15.2%, mainly to Southeast Asia.

**Supply-Demand Outlook** **PX**: 2026 adds 4.1M tons (9.3% growth), mostly H2. Imports may dip slightly amid Asian plant maintenance. Tight H1 supply shifts to balance by year-end. **PTA**: No new capacity, but 2025 startups add 3-4M tons output. Exports to Turkey/India face pressure from local plants, with net exports falling 400-500k tons. **MEG**: 2.7M tons new capacity (8.9% growth) worsens oversupply. Inventory builds in Q1/Q4, partial relief in Q2/Q3.

**Key Risks** Gasoline blending demand weakness and overseas PTA/MEG capacity timing remain critical for price trajectories.