Supply and demand imbalance expands, cost support declines, pbat market to continue weak volatile trend

Introduction: 5 In May, the domestic PBAT market was dragged down by supply-demand contradictions and weakened cost support, resulting in an overall weak and fluctuating trend. By the end of the month, mainstream transaction prices ranged from 11,300 to 12,200 yuan/ton, with an average price of 11,750 yuan/ton. It is expected that in June, the supply-demand contradiction will further intensify, support will continue to weaken, and under multiple bearish factors, PBAT will continue its weak and fluctuating trend, with prices still having room to fall.

1. 5PBAT market prices fluctuated weakly this month.

In May, the average monthly price of PBAT was 11,894 yuan/ton, a decrease of 0.53% month-on-month. The industry's production load did not change significantly, continuing to operate at low levels, while brand enterprises ran at high capacity. The market supply was abundant, and the supply side remained under pressure. Coupled with the decline in raw material prices, market sentiment was dragged down, leading companies to lower their quotes. On the demand side, support weakened; although the operating rate of biodegradable film bag enterprises slightly increased, the demand for biodegradable film has basically concluded, resulting in an overall decline in market support. In terms of costs, raw material prices were adjusted downward, slightly alleviating cost pressure for companies, which reduced market support. Throughout the month, the PBAT market price fluctuated downward. As of May 29, the reference price for PBAT in East China was 11,300-12,200 yuan/ton, with an average price of 11,750 yuan/ton.

2. The core support is weakening, with both costs and demand lacking upward momentum.

PBAT Supply and Demand Data Overview Table

Looking ahead to June, the core drivers supporting an upward move in PBAT prices are clearly insufficient, while continued weakness in both costs and demand will keep price gains under pressure.

Cost-side support continues to weaken. Although the previous decline in raw material prices has already driven production costs down, raw materials are still expected to fall further in June, making it difficult to support PBAT prices. Currently, BDO operating rates are below 50%, PTA around 70%, and adipic acid about 60%. All three raw materials are facing overcapacity, leading to intense competition among enterprises to sell their products. Adipic acid ex-factory prices have been cut multiple times; although some BDO facilities are under maintenance, the increase in demand is limited, so prices are unlikely to rise significantly. Overall, the theoretical cost of PBAT still has room to fall, and cost support is gradually weakening.

The incremental increase on the demand side is clearly insufficient, making it difficult to absorb the growth in supply and further widening the supply-demand imbalance. On the domestic supply side, new PBAT units from Shuguang Lvhua and the restart of Gansu Mogao’s PBAT facility are expected in June, while Wanhua Chemical’s PBAT unit will be operational throughout the month, leading to a significant increase in PBAT supply in June. On the domestic demand side, although the summer consumption peak will drive seasonal growth in demand for degradable shopping bags and garbage bags, resulting in a slight increase in the operating rate of finished product manufacturers, this growth is only at a regular seasonal level and remains limited in scale. Moreover, most small and medium-sized product manufacturers are still facing insufficient orders, with operations generally maintained at low levels and procurement mainly on a just-in-time basis, making it difficult to trigger concentrated restocking. On the export side, previous overseas restocking has already cooled down. Coupled with the fact that summer marks the traditional off-season for overseas consumption, order volumes have shrunk, and the boost to the domestic market has significantly weakened.

3. Short-term PBAT is expected to exhibit weak fluctuations as the main trend.  

Overall, it is expected that 6 Monthly domestic PBAT Continuing weak oscillation, the price range is within 11000-11800 yuan / tons, the monthly average price was higher than 5 The month moved further downward. Short term Structural overcapacity and insufficient effective demand remain the core contradictions in the industry. ‌ After completing a slight correction, prices will remain in a narrow range under the tug-of-war between support at the cost floor and pressure from increased supply, making a trend-driven rise unlikely.