According to the Zhitong Finance APP, Huazhong Securities released a research report stating that the current supply and demand pattern in the bottle sheet industry is experiencing marginal improvement. The combination of production cuts and the peak demand season is expected to drive industry profit recovery. Starting from June 2025, the industry plans to cut production by 3.36 million tons (accounting for 15.7% of total capacity), and the operating rate in July has dropped to 79%. Referring to the historical performance of a price gap recovery to 500 yuan/ton after the production cuts in Q2 2024, this round of production cuts may catalyze a price rebound. Meanwhile, the industry's concentration continues to rise (CR4 reaches 74%), enhancing the bargaining power of leading enterprises, coupled with steady domestic demand growth (CAGR of 10.63% over the past five years) and high export growth (with exports accounting for 36% in 2024), a reversal of the industry's profit bottom is expected.

The main points of Huazhong Securities are as follows:

Significant slowdown in capacity expansion, leading enterprises' voice continues to strengthen

In recent years, the bottle sheet industry has experienced rapid capacity expansion, exacerbating the supply-demand contradiction and putting continuous pressure on industry profits. The subsequent capacity growth rate has significantly slowed down. At the same time, the industry's concentration continues to rise, with the combined capacity share (CR4) of the top four producers (Yisheng, Wankai, SFX, and China Resources) reaching 74%, enhancing the bargaining power and collaborative action capability of leading enterprises.

Stable growth in domestic demand, external demand exports become an important support

In terms of domestic demand, the consumption of bottle sheets in China has maintained steady growth, with a compound annual growth rate (CAGR) of 10.63% over the past five years. Among them, soft drink packaging, as a core application area, is the main driver of domestic demand; the booming takeout economy has also driven the demand growth for bottle sheet materials. In terms of external demand, the export volume is expected to reach 5.85 million tons in 2024, accounting for as much as 36% of total production, with a five-year export CAGR of 15.04%, higher than the growth rate of domestic demand. The export market is relatively dispersed, with the top ten export destinations accounting for about 40%, which helps to disperse trade friction risks and enhance export resilience.

Considerable scale of production cuts, coupled with peak demand season, promising prospects for industry profit recovery

Starting from June 2025, the industry plans to cut production by 3.36 million tons, approximately 15.7% of the industry's total capacity, and the overall operating rate of the industry dropped to about 79% in July. Referring to the significant production cuts in Q2 2024, the price gap for bottle sheets recovered to around 500 yuan/ton. This round of production cuts, under the dual effect of the end of supply-side expansion and the seasonal peak on the demand side, is expected to improve the market supply-demand pattern and promote product profit improvement.

Risk Warning

Risks of production cuts not meeting expectations; significant fluctuations in raw material prices; downstream demand growth not meeting expectations; overseas economic slowdown and trade frictions leading to exports not meeting expectations