FocusAsia PX poised to remain firm through Q1 2010 - sources

12 January 2010 06:33  [Source: ICIS news]

By Bohan Loh and Becky Zhang

SINGAPORE (ICIS news)--Asian paraxylene (PX) spot prices are poised to remain firm through the first quarter of 2010 on reduced operating rates coupled with a series of scheduled and unscheduled maintenances at regional plants, market players said on Tuesday.

PX was assessed at $1,145-1,155/tonne (€790-797/tonne) CFR (cost and freight) Taiwan and/or China on Monday, up $35/tonne since end-2009, according to global chemical intelligence service, ICIS pricing.

“Looking at the overall supply and demand situation, PX looks good through February at least,” said a source from Taiwanese purified terephathalic acid (PTA) producer, Formosa Chemical and Fibres Corp (FCFC).

The source was referring to a heavy maintenance schedule coupled with reduced operating rates of Japanese PX producers. (refer to table below for reduced operating rates at other PX makers)

Idemitsu Kosan would operate both its Chiba and Tokuyama-based facilities, which can jointly produce up to 480,000 tonnes/year of PX, at 80-90% of nameplate capacity through February due to lack of feedstock naphtha.  

Japan Energy shut down its 400,000 tonne/year Chita-based PX plant on 7 January for a 45-day maintenance. The company’s other two Kashima-based facilities were also scheduled to undergo a 50-day maintenance from mid-April.

An outage at CNOOC-Kings' Huizhou PX facility on 9 January was expected to exacerbate the already limited availability of spot parcels for February and March delivery.

The company estimated a resulting production loss of 30,000 tonnes of PX and expected to restart the facility in phases from 16 January.

“We will try to fulfil our requirements on the spot market,” said a source from a major PTA maker based in south China who regularly procures material from CNOOC-Kings.

The outage at the plant had coincided with a pre-Chinese New Year buying frenzy among Chinese PTA makers when players build up inventory levels ahead of the week-long holidays.

“We are looking to purchase more materials either this week or next,” said a source from China East Hope, a PTA maker based in Chongqing.

Firmer PX prices had pushed PTA up by $15/tonne to $940-950/tonne CFR China by the close of business on Monday.

As such, PTA producers could still maintain a profit margin of $20-40/tonne, assuming additional production costs other than raw materials would average around $150/tonne, some traders said.  

This had induced PTA producers in China to raise operation rates to over 95% in early January from 85% towards the end of November following the completion of several maintenances.

Despite the rosy outlook in both the regional PX and PTA markets, concerns were raised among players in the downstream polyester sector as poor margins and rising inventory pressures had recently sparked a worrying trend of shutdowns to minimise losses, said traders.

Transaction volumes at the Zhejiang Textile City in eastern China continued to shrink from the 6.47m meters/day in early December to around 5.55m meters/day last week, reflecting the softness in the garment industry.

Although $100-200/tonne or 1-2% gains were achieved for polyester short staple fibre and filament for the week ended 5 January, it was still hard for the polyester makers to pass on the 5.4% hike in feedstock prices including PTA and another major raw material mono ethylene glycol (MEG).

In addition, shutdowns for a total of 790,000 tonnes/year PET bottle grade and 600,000 tonnes/year polyester filament capacities have already been planned beginning mid-January through February in China due to soft demand and also the Chinese Lunar New Year holiday.

Source: ICIS pricing

($1 = €0.69)

Please visit the complete ICIS plants and projects database
For more information on PX visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Bohan Loh
+65 6780 4359

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