Recently, market participants said that because a large number of new capacity will be put into use in the second half of the year, the situation of excess supply of PX in Asia may continue in the short term. Since the beginning of July, the premium spread between August and September PX has been about $15-20 per ton. Due to the high PX inventory in China, the end-user’s desire to purchase immediate goods has been basically curbed.
PX gross profit continued to decline. According to ICIS data, the naphtha PX price difference hit a low of $136.50/t on July 6. The market believes that the narrowing of naphtha-px price gap is due to the weak PX fundamentals and the firm naphtha price. The naphtha market is supported by stable and tight supply, strong gasoline market and good fundamentals of olefin chain market. The special PX production unit using mixed xylene (MX) and toluene raw materials continues to face production profit squeeze, and PX gross profit is lower than expected. Products such as toluene, benzene and MX performed poorly with naphtha, which means that the profit margin of the chemical reforming process is facing great downward pressure. However, the loading rate of p-xylene production process with mixed benzene has not decreased significantly because its operation rate is usually integrated with refinery operation.
There will be further oversupply. PX manufacturers suffered from lower operating rates as profits narrowed, and several factories were shut down due to planned maintenance. Sk global chemical company (skgc) and S-oil recently shut down the PX unit for planned maintenance. Formosa Plastics Chemical Fiber Company (FCFC) has restarted its No. 3 PX unit, but it still maintains the operating rate of about 50%. Due to the slow growth of downstream PTA and polyester market demand, several new PX units will be put into operation in China, and the supply situation is likely to deteriorate further.
The future demand is not smooth. The novel coronavirus pneumonia has continued to block the measures in Indonesia and India, and several PTA plants in Indonesia and India have been closed. Although these PTA plants have been restarted, due to the weak global macroeconomic environment, the downstream demand of polyester industry chain continues to be weak, resulting in PTA inventory continues to increase. In the case of no strong recovery of global macro-economy, PTA operating rate may continue to face downward pressure, which will cause PX demand to remain stable and weak.