OUTLOOK ’19: Europe PX, OX markets to be better balanced

LONDON (ICIS)–Availability of European co-products paraxylene (PX) and orthoxylene (OX) is expected to improve in 2019 following some ongoing tightness in 2018. Nevertheless, the PX market in particular is expected to remain structurally short in the near term future.

A number of production and logistics issues limited product supply and exerted upward pressure on PX and OX spot and contract prices through most of 2018.

Availability was mostly impacted by the force majeure at BP’s plant in Gelsenkirchen, Germany, between April and August, followed by the historically low levels of the river Rhine later in the year.

BP’s force majeure was followed by lengthy maintenance, which continued limiting OX and PX supply well into December. Production at the plant is, nevertheless, expected to begin again soon, which will improve the availability of the products in 2019.

Separately, water levels on the river Rhine improved dramatically in the week to 7 December, increasing from 31cm to 154cm in a week. The boost allowed for barge deliveries to restart, which too indicates a smoother supply of OX and PX at the start of 2019.

The outlook for the OX market in the first few months of 2019 is bearish, with downstream phthalic anhydride (PA) demand not expected to pick until the spring season.  Two ongoing PA plant maintenance closures are separately set to limit OX demand in January.

The PX market is, on the other hand, expected to remain structurally short despite the expected availability boosts.

PX consumption in Europe increased following the July start-up of Indorama’s 700,000 tonne/year purified terephthalic acid (PTA) plant in Sines, Portugal. The plant had been largely idle since it was closed in 2014 and is a major new consumer of PX in Europe.

Prices and availability of PX in Europe will continue being heavily impacted by the dynamics in the more liquid Asian market, from which Europe actively imports.