China aims to tackle over-capacity in some plastic and fibre petrochemicals

By Sam Li and Lewis Jackson

BEIJING, Oct 28 (Reuters) - China's industry ministry has convened petrochemical companies producing fibres and plastics used to make clothing and bottles, aiming to address over-capacity in the sector.

The meeting will be held on Wednesday and deal with "involution," a Chinese word that means relentless competition that destroys profits, among producers of purified terephthalic acid $(PTA)$ and its downstream product, bottle-grade polyethylene terephthalate (PET) chips, according to a notice from China's Ministry of Industry and Information Technology (MIIT) dated October 27, circulating on social media.

The notice also asked companies to submit data on capacity, production, demand and profitability for the products, along with the status of projects under construction.

Reuters called the phone number listed in the notice and an MIIT employee confirmed that the meeting is taking place.

Both PTA and PET are plagued by overcapacity and rank near the bottom of petrochemical sector on margins, which Beijing is seeking to curb.

Bottle‑grade PET chip capacity has doubled over the past three years to 22 million metric tons, exceeding demand, Guotai Junan Futures said.

China's PTA production capacity has also doubled to 92 million tons since 2019, consultancy China Chemical Fibre said.

PTA units with advanced technology accounts for more than 60% of total capacity in 2025 but still lose about 21 yuan per ton, while older units lose around 561 yuan, according to consultancy Oilchem.

"The U.S. tariffs also squeezed PTA profits from exports of downstream textiles and apparel," said Guotai Junan Futures analyst Xiaoqin He.

Participants include the top six producers, Zhejiang Yisheng Petrochemical, Hengli Petrochemical 600346.SS, Tongkun Group 601233.SS, Xin Feng Ming Group 603225.SS, Shenghong Petrochemical 000301.SZ and Sanfangxiang Group 600370.SS, accounting for about 75% of China's PTA market share, Tebon Securities said in a note.

The companies listed in the notice did not immediately respond to Reuters' requests for comment.

(Reporting by Sam Li and Lewis Jackson; Editing by Rashmi Aich)

((Sam.Li@thomsonreuters.com;))