Views: 1 Author: Site Editor Publish Time: 2019-07-11 Origin: Site
Source: China Chemical Industry News July 04, 2019
Affected by the successive production of new capacity in China, it is expected that the new supply in the Asian para-xylene (PX) market will increase significantly in the second half of this year. On the demand side, Sino-US trade frictions continue to be suppressed, and Asian PX prices will be under tremendous pressure.
China's PX production capacity is showing a blowout. Four of the five new PX projects planned for production in Asia this year are located in China. Hengli Petrochemical's 4.5 million ton/year large PX unit in Dalian has been put into operation on May 21; Sinopec's newly built 1 million ton/year PX unit in Hainan and Sinopec Hongrun's 800,000 ton/year PX unit are expected to be Put into production in the third quarter; Zhejiang Petrochemical's new 4 million ton/year PX plant in Zhoushan is scheduled to be put into production before the end of this year.
Once these new installations are successfully commercialized, China's dependence on PX imports will decline significantly. In 2018, China imported 15.8 million tons of PX, of which more than 50% came from South Korea and Japan. In 2018, China consumed about 26.4 million tons of PX. Based on the usual 6.0% increase in China's PX demand, China's new PX demand in 2019 was only 1.5 million tons, far below the new capacity. Of course, due to the complexity of the new facility, it will take some time to achieve smooth business operations, which may be beneficial to the PX market in the short term.
On the downstream side, although some major PX downstream purified terephthalic acid (PTA) plants are being put into production as planned, the downstream demand in the Chinese PX market is still weak. Certainty hinders the growth of PX demand. In the context of continued trade friction between China and the United States, Chinese PTA producers have been maintaining low levels of raw material PX stocks because of concerns about huge losses. PX's purchase model is mainly based on demand. Due to the uncertain market prospects, PTA manufacturers have limited willingness to increase PX raw material inventory.
The combination of these factors has led to pressure on Asian PX prices. Earlier this year, Asian PX spot prices performed strongly, but this was mainly affected by the PX device maintenance season in the second quarter of this year. Buyers have been hoarding inventories due to expected tight supply. However, after Hengli Petrochemical's 4.5 million ton/year PX project was put into production earlier than expected, market supply increased, which put downward pressure on prices.
An Xunsi data shows that at the end of March 2019, the spot price of Asian PX reached its peak this year, and the main settlement price of monthly PX Asian contract price (ACP) also reached USD 1050/ton and USD 1080/ton in February and March Peak level. At the beginning of February this year, the price difference between PX and upstream naphtha in the Asian market rose to around US$614.25/ton, setting the highest level so far this year and far above the market’s healthy level of US$350/ton. With the substantial increase in market supply, the market uncertainty brought about by the continuous Sino-US trade war has exacerbated people's concerns that supply will turn into surplus. Entering the second quarter, Asian PX prices continued to fall. On June 17, Asian PX spot prices have fallen to US$814~816/ton (CFR, China), which has fallen by nearly 30 compared with the peak level set at the end of March this year. %.