PTA market has risen straightly since July. In China, PET bottle chip plants have been overwhelmed by the sharp rise in cost. In first week of September, the spread between PET bottle chip prices and raw material cost has been rapidly compressed to around RMB 550 per ton, indicating serious losses, and some low prices were even flat with fiber grade bright PET chips. However, it is clear that the PET bottle chip plants in August still has some profit. The main reason is that although the PTA spot prices rose sharply in August, the spot goods was mostly repurchased by major PTA producer. The PET bottle chip plants can still make a profit by using the low-priced raw material inventory or the sale of raw materials and reducing the production. But in September, the PET bottle chip plants will begin to face the hardships. From the current price soaring of PTA and MEG, the raw materials cost will start at least around RMB 10,800 per ton, so most producers should sell PET bottle chip at least above RMB 11,500 per ton. The prices may probably hit the record high before the PTA September contract is delivered, but considering that the downstream demand is significantly reduced, the transactions may be very thin. PET bottle chip demand is soft in this month; hence current high pricing poor demand may make more plants to cut back production to prevent loss. So far, a total of 1.65 million tons output are cut back, including Sanfangxiang, China Resources, Wankai, Sinopec Yizheng, Pan Asia and Far Eastern. The closed volume accounts for 17.4% of total capacity. The average capacity utilization rate of PET bottle chip plants has dropped below 75%. The lines with 700-900 kta are to turnaround in the coming September and October. In China domestic PET market average capacity utilization rate may drop to 72% at its lowest in 4Q18, falling nearly 20% compared with July.