OUTLOOK ’19: Asia PX supply to lengthen on new capacities

Source: ICIS News

2019/01/07

SINGAPORE (ICIS)--Supply of paraxylene (PX) in Asia should gradually lengthen as a result of PX capacity expansion growth,driven by two large production units coming on stream in the key China market this year.

Hengli Group’s PX new capacity would stand at around 4.5m tonnes/year, while Zhejiang Petrochemical Corporation will be able to produce 4m tonnes/year of PX.

PX is a feedstock for purified terephthalic acid (PTA), which mainly goes into polyester fibres and polyethylene terephthalate (PET).

Around 98% of PX is used for PTA or dimethyl terephthalate (DMT) production.

China is the key PX demand hub globally, with the country being net-short and heavily reliant on imports.

Furthermore, global demand growth is mainly driven by China, with China’s PTA production capacity standing at around 57% of total global PTA production capacity.

In 2017, China imported around 14.4m tonnes of PX, while imports in 2018 from January to November stood at 14.3m tonnes.

China PX imports in 2019 are expected to decline from the previous year as a result of new PX capacities being added within the country.

Aside from the two mega COTC projects, Sinopec is planning to start up a new 800,000 tonne/year PX unit in the third quarter of 2019. The PX unit is located in Hainan, with mixed xylenes being its main feedstock.

Towards the end of 2018, two idled PX capacities restarted due to improved PX production margins.

The PX and naphtha price differential has risen above the 3-year average price since August 2018, as seen in the chart above.

Indonesia’s Trans Pacific Petrochemical Indotama (TPPI) restarted its 550,000 tonne/year PX unit in October 2018. The unit had been shut since May 2014.

China’s Fuhaichuang Petrochemical, formerly Dragon Aromatics (Zhangzhou), also resumed PX production at one 800,000 tonne/year PX line on 25 December 2018.

Its other 800,000 tonne/year PX line is expected to restart in January 2019. Both PX lines were shut after a massive fire in April 2015.

In the last two years, PX demand has been supported by strong growth in the key Chinese downstream PTA and polyester markets.

In both years, downstream demand saw double-digit growth, compared to the more typical 6-7% annual growth.

A 10% demand growth in China implies that 2.5m-3m tonnes/year of new PX capacity is required.

However, demand growth outlook is unlikely to see more double-digit growth in 2019, amid a bearish macroeconomic environment.

PX supply in Asia will be in excess in the near term once smooth operations have been achieved at the new PX capacities.

Furthermore, there are limited new downstream PTA facilities scheduled for startup in 2019, with the majority of new PTA capacity only expected to be added in the year 2020.

However, there might be a little relief for Asian PX following the announcement of the closure of Chevron Philips Chemical’s 495,000 tonne/year PX unit located in Pascagoula, Mississippi.

This might allow an increase in trade flows of Asian PX to the US.

New PX Capacity

Company Country Location Capacity ('000 tonnes) Expected startup Hengli Petrochemical China Dalian 4,500 Q3 '19 Saudi Aramco Saudi Arabia Jizan 800 Q4 '19 Sinopec Hainan No 2 China Hainan 1,000 Sep/Oct '19 Zhejiang Petrochemical (Zhoushan) China Zhoushan 4,000 Q3 '19 Hengyi Brunei Brunei Pulau Muara Besar 1,500 2020

PTA New Capacity

Company Country Location Capacity ('000 tonnes) Expected startup Sichuan Shengda China Sichuan 1,000 Q1 '19 JBF India Mangalore 1,250 2019 Xinfengming China Jiaxing 2,200 end-19 Hengli Petrochemical China Changxing 2,500 Q4 '19 Zhongtai Kunyu China Karamay 1,200 2020 Zhongjin PC China Ningbo 3,300 2020 Formosa China Ningbo 1,500 2020

(Top Image: Photographer ALEKSANDAR PLAVEVSKI/EPA-EFE/REX/Shutterstock)

Focus article by Samuel Wong