PET and Raw Materials: 2025 Review and 2026 Outlook

The global polyester value chain entered 2025 under mounting pressure, shaped by chronic overcapacity, unsustainably low profitability, and accelerating rationalization across multiple regions. China remains at the center of this structural imbalance.

Since 2021, China has more than doubled its ABS nameplate capacity—from 4.12 million tonnes per annum (tpa) in 2021 to 9.99 million tpa in 2025—although much of this capacity remains underutilized. Additional ABS projects are planned, though some may ultimately be canceled due to oversupply. This expansion underscores the scale and competitiveness that continue to ripple across global polyester markets.

Global Market Review 2025: Unsustainable Profitability and Widespread Rationalization

Oversupply across the polyester chain remained the defining characteristic of 2025, though the severity varied by region. China carried the largest surplus—especially in PTA and PET—and maintained the strongest cost position through scale and integration. The United States and Saudi Arabia showed similar structural length in glycols.

China's cost advantage continued to cascade through global PET markets, pushing down margins in other regions and leaving profitability at or near zero across all polyester products. These conditions have made rationalization unavoidable. Plant closures, reduced operating rates, and restructuring initiatives intensified worldwide, including in China.

Value chains outside China are becoming increasingly fragile, as regional producers struggle to maintain both acceptable operating rates and healthy margins simultaneously. End-use demand for PET-related products is rising globally, but with significant regional variation—driven by GDP-aligned growth in China and Asia, above-GDP growth in emerging markets, and flat to declining consumption in mature markets.

Recycled PET (R-PET) continues to displace virgin PET. In North America and Europe, ongoing rationalization has reshaped supply chains and increased reliance on imports. Europe no longer produces DMT, and the United States will not produce PIA in 2026.

Protectionism intensified as antidumping and antisubsidy cases, tariffs, and import restrictions became necessary tools for defending domestic industries. Although favorable rulings may temporarily support upstream margins, downstream users face greater cost pressure as imports of PET, fiber, and film remain competitive. China’s growing availability and global cost advantage have strengthened its role as the dominant exporter, especially into markets with limited domestic PET or PTA capacity.

With crude oil prices low and spreads compressed, feedstock and PET prices sat near historic lows throughout 2025.

2026 Outlook: Market Conditions Expected to Remain Challenging

Chemical markets are expected to remain turbulent in 2026. Multiple unresolved issues—and potential new disruptions—will continue to influence supply–demand balances.

Geopolitical tensions, ongoing conflicts, and macroeconomic uncertainty add risk and potential for sudden price volatility. Brent crude, freight rates, and exchange rates will continue to be key drivers of feedstock, intermediate, and PET pricing. With spreads already extremely low, PET prices have become closely tied to crude oil movements, leaving little room for further margin compression.

Despite global overcapacity, rationalization in PTA, PIA, MEG, and PET could temporarily tighten local supply in some regions as supply chains become more complex and increasingly import-dependent. Trade barriers and free-trade agreements will continue reshaping global flows.

Asia and China: Capacity Build-Out Slows, but Margin Pressure Persists

The major capacity expansion cycle of 2023–2025 for PX, PTA, MEG, and PET is now coming to a close. Nevertheless, additional PET projects remain underway in China, including a 600 ktpa line from Shandong Fuhai and a 400 ktpa plant from Koksan in Nantong.

The impact of China's emerging “anti-involution” policies—designed to curb price wars, reduce chronic oversupply, and support higher utilization—remains unclear. The policy aims to drive consolidation, discipline, and the exit of inefficient assets.

Domestic demand in China shows no signs of a sharp rebound. Growth for 2026 is expected to be stable versus 2025, at roughly 5–6 percent year over year—slower than the pace of 2024. PET operating rates averaged around 75 percent in the second half of 2025; without deeper rate cuts, margin pressure is expected to continue into 2026.

Chinese PET producers remain confident in defending export volumes despite intensifying competition. China's cost advantage continues to squeeze PTA and PET margins across Asia and is prompting further regional protectionism and rationalization. Similar dynamics are emerging in EO/glycols, where competitive production in the Middle East and North America is pressuring Asian operations.

Isophthalic acid operating rates in Asia are expected to rise in 2026 as supply tightens following the outage of INEOS's U.S. PIA unit.

Americas: Tariffs Reshape Trade, Raise Utilization, and Push Cost Changes Downstream

In North America, tariffs and trade measures are set to reshape PX, PTA, and PET flows in 2026, reinforcing regional supply patterns. PET tariffs—along with duties on PTA and PX—should gradually boost domestic buying, increase production utilization, and support producer margins.

However, the closure of the only U.S. PIA producer will materially increase import reliance beginning in 2026. PET producers in the United States have announced price increases of 6–9 cents per pound for Q4 2025 deliveries, and PET deltas/adders are broadly accepted by buyers. Contract negotiations for 2026 are ongoing, with the magnitude of the proposed increases still under discussion.

PTA suppliers are proposing lower rebates for 2026 formulas. Despite existing import duties, PTA imports may again become competitive, depending on the contract structures. In EO/glycols, U.S. producers need to export around 300 kt/month of MEG to support high operating rates. Flat domestic demand, weak glycol economics, and challenges accessing China due to retaliatory tariffs could drive further rate cuts or rationalization.

Tariff-related legal uncertainty persists, though no Supreme Court decision is expected until mid-2026.

In South America, the region, excluding Brazil and Argentina, remains heavily supplied by Asia, particularly China. In Argentina, the removal of import restrictions and inadequate domestic industry support reduced operating rates for the country's only PET producer. In Brazil, PET demand is expected to remain healthy but not as strong as in 2023–2024. Producers may idle lines to manage inventory, while exports from Brazil and Mexico face stiff price competition from lower-cost Asian PET.

Europe: More Rationalization Expected as Producers Confront Cost and Import Pressure

European PET producers face challenging strategic decisions in 2026, as achieving both acceptable margins and adequate volumes remains a difficult task. Rationalization is likely to continue. Plastiverd in Spain is not expected to produce in 2026, and Novapet plans to keep one line down unless market conditions improve.

Anti-dumping investigations on key feedstocks add cost uncertainty for PET producers. PTA imports from Korea and Mexico (case opened August 2025) and revised MEG duties on U.S. and Saudi material are influencing contract discussions. For PTA, a rollover of 2025 terms appears to be the best-case scenario for 2026, given uncertainty surrounding the investigation. MEG producers continue running at low rates and weak profitability, and buyers are pushing for higher contractual discounts in 2026. A rollover to slightly higher discounts is the most likely outcome. A possible reduction of the current 5.5 percent duty on U.S.-origin MEG to zero in 2026 remains unconfirmed.

The only non-Asia PIA producer in 2026 continues to run at low rates, unable to compete with Asian imports.

The European Commission launched an anti-dumping investigation into PET imports from Vietnam on May 22, 2025, with results expected in January 2026.

European PET prices and spreads appeared to bottom out in October and November 2025 and firmed slightly in December. Buyer behavior has not fundamentally changed, but low European PET prices have reduced the attractiveness of Asian imports, supporting expectations of higher regional utilization in the first quarter of 2026.

Rising PET imports from Turkey, potential new free-trade agreements, and the outcomes of ongoing AD cases on PET and PTA will be critical factors shaping European operating rates and raw-material consumption. Building a strong and nearly integrated supply chain is the goal, but Europe's cost structure and limited integration make this difficult.