PX surplus capacity to rise from 2009-consultant

26 May 2008 11:32  [Source: ICIS news]

SINGAPORE (ICIS news)--New sources of supply from the Middle East are expected to cause a paraxylene (PX) surplus in the global markets from 2009 onwards, said a company executive at the 3^rd DeWitt Asian Annual Aromatics Seminar in Singapore on Monday.

The average global operating rate for paraxylene is set to fall below 80% as China was also adding capacity, leaving margins under severe pressure for producers, added Andy Nicholson, consultant with DeWitt & Co. 

The surplus supplies were "basically for exports to Asia," Nicholson said.

The Middle East and India had made considerable investments in PX due to its high growth rate, he said, adding that the Middle East, including Saudi Arabia, had extensive plans to expand refinery capacity and set up a number of aromatics projects.

Reliance's plans to expand its PX output in India to 4.6m tonnes/year in the coming years would result in surplus supply, which could potentially disrupt the market due to the large quantities involved.

PX investments in the Middle East, apart from Yanbu in Saudi Arabia and Bandar Iman in Iran, were export-oriented, he said, adding that projects in Oman and Kuwait that were expected to start up in 2009, would bring a total of 1.6m tonnes/year to the market.

Production in Assaluyeh, Iran was expected to reach 750,000 tonnes/year soon as feedstock became more freely available.

There would be a further 2m tonnes/year increase in PX availability if incremental capacity became available from projects in Al Jubail, Ras Tanura and Rabigh in Saudi Arabia.

Nicholson said that Europe would be able to absorb nearly 500,000 tonnes/year of PX from the Middle East from 2011 onwards, once the PTA plant being built by Artenius/La Seda in Portugal became operational.

The balance of the surplus in the Middle East and India would move to Asia, probably peaking at over 2m tonnes/year between 2011 and 2014, although the volume cited depended on the timing of the Reliance and Aramco projects, which have not been finalised.

Nicholson, citing the DeWitt 2007 Xylenes Chain Competitiveness study, said that after taking transportation charges into account, PX production in Saudi Arabia or India was less competitive than in northeast China or southeast Asia.

However, production costs would be lower than in the traditional exporting locations of Japan, Korea and the US Gulf, he added.

The two-day DeWitt Asian Annual Aromatics Seminar concluded on Monday.

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By: Cheang Chee Yew
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