FocusProduction cuts may not stem Asia PX falls - market sources

28 September 2009 07:43  [Source: ICIS news]

By Bohan Loh

SINGAPORE (ICIS news)--Paraxylene (PX) prices in Asia may continue to fall despite producers' attempts to cut output as demand continued to be weak, while more supply will come from the Middle East in the coming months, market sources said on Monday.

Producers were looking at cutting operating rates at regional plants (please see table below) this October in response to free-falling PX prices.

Spot PX prices have fallen for eight straight weeks, closing at $850-865/tonne (€578-588/tonne) CFR (cost and freight) Taiwan and/or China Main Port (CMP) on Friday, according to global chemical intelligence service, ICIS pricing.

Around 98% of PX is consumed in the polyester chain, mainly in the production of fibre, film and polyethylene terephthalate (PET) bottle resins.

Greenfield capacities from the Middle East coming on stream in the fourth quarter may create a glut in PX and depress prices further, market sources said.

End-users were expecting up to 34,000 tonnes of PX from Kuwait Aromatics’ (KARO) new 820,000 tonne/year plant to berth at Chinese ports as early as November.

“We are expecting PX cargoes from KARO by November. They told us they would be starting up on 1 October,” said a source from Zhejiang Yuandong, a large Chinese purified terephthalic acid (PTA) producer.

A source from another PTA producer, XiangLu Petrochemical, told ICIS news that it was also expecting material from the Middle Eastern producer in November.

Other greenfield capacities include Oman Aromatics’ 815,000 tonne/year Sohar facility that is due to start up within the fourth quarter. This would further boost supply at a time of weak demand. Traders were currently finding it difficult to find buyers, industry sources said.

“I heard quite a few traders had rolled over their October cargoes to November as they could not find any interested buyers last week,” said a source from Korean trading firm, LG International.

End-users were uninterested at the beginning of last week when traders were actively offering any November cargoes around $880-890/tonne CFR Taiwan and/or CMP.

It was only towards Friday when traders had to aggressively slash offers to liquidate long positions and induce buying that two shipments were concluded at around $860/tonne CFR Taiwan and/or CMP.

“I think buyers are going to be looking for cargoes around $840-850/tonne CFR Taiwan and/or CMP now,” said a Shanghai based trader.

Company

Plant

Capacity (tonnes/year)

Original ops

Current ops

Nippon Oil*

Kawasaki

350,000

100%

70-80%

 http://www.eneos.co.jp/english/

Mizushima

225,000

100%

70-80%

 

Mizushima

225,000

100%

70-80%

 

 

 

 

 

Zhenhai Refining and Chemical+

Zhenhai (Ningbo)

650,000

100%

70-80%

Jinling Petrochemical+

Nanjing

600,000

100%

70-80%

Qingdao Lidong+

Qingdao

700,000

100%

70-80%

CNOOC-Kings+

Huizhou

900,000

100%

70%

 

 

 

 

 

CPC Corp+

Kaoshiung

150,000

100%

70-80%

 http://www.cpc.com.tw/english/home/index.asp

 

250,000

100%

70-80%

 

 

260,000

100%

70-80%

*Operating rates already reduced
+Planned for reduction in October

($1 = €0.68)

For more on benzene visit ICIS chemical intelligence
Please visit the complete ICIS plants and projects database
To discuss issues facing the chemical industry go to ICIS connect


By: Bohan Loh
+65 6780 4359



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