The aromatics market is a very liquid market compared to other chemical markets. It is an excellent leading indicator for industry pricing and volume trends, and forecast the current rally in April 2009.
The chart above shows how Brent crude oil prices have moved since January 2009 (purple line), versus China's prices for PTA (terephthalic acid, red), PX (paraxylene, green) and PET bottle resin (blue).
As can be seen, changes in Brent led prices higher for the C8 chain until early in 2011. But since then, they have begun to move in different directions:
• Brent has continued higher, and is nearly 200% of its January 2009 level
• The C8 chain, however, has slipped back in recent weeks
Yet PX supply problems in Japan should have led to higher prices, as China imported 1 million tonnes from Japan in 2010.
This divergence in price trends between crude oil and the C8 chain is therefore an important warning signal. Sadly, a downturn in chemical demand may not be very far away.