In December, PTA prices climbed to their highest level of the second half of the year. A confluence of supportive factors, including upstream cost support, high operating rates at downstream polyester plants, and robust PTA export volumes, has fueled strong bullish sentiment in the market. As of December 26th, the intraday price was merely 108 yuan/ton away from the 2025 peak, raising the question of whether a short-term breakthrough above the 2025 spot price high is imminent.

PTA prices reached their second-half high in December. Based on the intraday spot price on December 26th, the price had increased by 565 yuan/ton, or 12.3%, compared to the spot price on December 17th. The primary drivers behind this price surge are cost support, solid end-user demand, and high PTA export volumes. Expectations for PX supply and demand have turned more optimistic, with a华东 reforming unit scheduled for imminent maintenance and Asian PX plants announcing maintenance plans for next year, propelling PX prices higher. The average monthly PX price in December rose by over 3% month-on-month, directly pushing up PTA prices despite a decline in the average monthly crude oil price. Downstream demand remained firm, with the average monthly operating rate for polyester plants in December staying near 89%, aiding in PTA inventory drawdowns. PTA exports in November reached 358.9 thousand tons, a significant increase of 61.26% month-on-month, accelerating inventory reduction and bolstering market sentiment. The notable recovery in PTA exports represents the most pronounced variable in the recent market. Exports to India in November amounted to 69.8 thousand tons, a substantial increase of 57 thousand tons, or 477.07%, compared to October. The marked increase in November PTA exports brought the volume back to its highest level since July. This rebound aligns with prior market expectations; following the expiration of India's BIS certification in June 2023, Chinese PTA exports to India were hindered. After the cancellation of the Indian BIS in November 2025, the channel for Chinese PTA exports to India became unobstructed, and Indian buyers require Chinese PTA to fill their supply gap. The recovery in export volumes has boosted market confidence. With PTA exports in October 2025 having dropped to only 222.5 thousand tons, a low since March 2024, a continued slump would have prevented the release of domestic PTA surplus pressure. The significant rebound in November exports marks a turning point, suggesting exports have bottomed out and are recovering.

Short-term Outlook: Prices Likely to Rise Further, but Upside Potential Appears Limited Cost Side: Raw material PX prices are rising. With numerous annual maintenance turnarounds scheduled for PX units in the coming period, particularly frequent rumors concerning maintenance at a large华东 refining and chemical complex, and expectations for PX inventory drawdowns, PX prices are forecast to remain strong. From July to December 2025, the average PTA processing margin remained at a low level of 200 yuan/ton for five consecutive months. It is estimated that PTA will continue with low processing margins into the first quarter of 2026, with PX still capturing the majority of profits within the polyester chain, thereby providing cost support for PTA. Exports: PTA export volumes are expected to continue increasing. It is projected that PTA exports will keep rising in the short to medium term, supported by the ongoing positive impact of the Indian BIS cancellation and intense competition in the domestic PTA trade market, which encourages suppliers and traders to actively participate in exports. To gain market share, some PTA export prices are reportedly low, with hearsay of some sellers offering at "PX + $47". Calculated using the RMB central parity rate, $47 translates to approximately 332 yuan/ton. It is estimated that China's PTA exports to India could remain elevated until the commencement of India's new 1.25 million-ton PTA capacity in April 2026, potentially reaching around 70 thousand tons per month to India. From December 2025 to April 2026, exports to India could total 350 thousand tons, which would be beneficial for the domestic PTA market. Demand Side: The traditional demand off-season is approaching. As of December 25th, the operating rate of downstream polyester plants remained around 89%, indicating solid demand for PTA. However, the comprehensive operating rate for weaving machines in the Jiangsu-Zhejiang region was 61.5%, showing a continuing downward trend. Negative feedback from terminal demand in the industrial chain will exert downward pressure on the market from the bottom up, leading to a reduction in polyester plant operating rates. Furthermore, with the surge in polyester raw material prices in December 2025, polyester production has theoretically entered a loss-making territory, which may prompt polyester plants to initiate production cuts earlier than usual. Historical operating rates for polyester plants in January-March from 2018 to 2025 were around 80%, 77%, and 86%, respectively. It is anticipated that polyester operating rates will see a significant decline in January-February 2026, negatively impacting PTA demand. Rising PTA prices are likely to attract capital into the PTA market, stimulating trading activity, as the psychology of "buying in a rising market, not a falling one" may accelerate spot circulation across the supply chain. Higher PTA prices benefit PTA producers by allowing them to lock in processing margins through pricing agreements but make it difficult for downstream polyester plants to pass on cost pressures. Some downstream enterprises that did not secure prices earlier may have no choice but to continue waiting. In summary, supportive factors such as cost backing, still-high operating rates at downstream polyester plants, and optimistic PTA export expectations are highly likely to push PTA prices higher. However, as terminal demand enters its traditional off-season, weakening demand is expected to curb the upward momentum of PTA. It is projected that even if PTA prices break through the 2025 high, the room for further gains thereafter will be limited.