Asia PX faces supply glut in near term on new capacity expansions

Author: Samuel Wong

2019/08/29

SINGAPORE (ICIS)--Asian paraxylene (PX) markets might face a supply glut in the short term on the back of new capacity start-ups, while downstream demand continues to be weak.

A female worker at a textile factory in Huaibei, China. Textiles are a major downstream industry for paraxylene. (Source: Imagine China/Shutterstock)

A total of 6.5m tonnes/year of new PX capacities are expected to come online by the end of the year.

In China, Sinopec Hainan plans to start up its new 1m tonne/year PX facility in October, while Zhejiang Petrochemical targets to start up its new 4m tonnes/year PX complex in November-December period.

In Brunei, Hengyi Petrochemical is targeting to start up its new 1.5m tonne/year PX unit in October.

In the short term, the PX capacity expansion outstrips the capacity growth in the downstream purified terephthalic acid (PTA) sector.

NEW PTA CAPACITIES
By the end of the year, a total of 4.7m tonnes/year of new PTA capacities are expected to startup by the end of the year. This would only translate to a total of 3.1m tonne/year of new PX requirement.

Zhejiang Xinfengming targets to start up its new 2.2m tonne/year PTA unit in October, while Hengli Petrochemical plans to start up its new 2.5m tonne/year PTA unit in the fourth quarter this year.

PTA capacity expansion growth will only start to accelerate in the second half of next year, adding a total of another 9.5m tonne/year of new PTA capacities by the end of year 2020. This would translate to a total of 6.27m tonnes of PX requirement.

Thus, in the short term, PX supply might turn to a huge surplus once new capacities all startup as scheduled.

However, they are limited further expansion plans for PX going into next year, and thus supply might balance out once new PTA capacities startup.

NEAR-TERM OUTLOOK

From September onwards, Asia will see around 438,500 tonnes of PX production loss as a result of scheduled turnarounds, ICIS data shows.

This might keep supply from abruptly turning long following the startup of new capacities.

FEEDSTOCK SPREAD - ISOMER XYLENES AND ASIA PX 

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In addition, the narrow spread between feedstock isomer-grade xylene (MX) and PX is squeezed, resulting in negative production margins. This might result in operating rate cutbacks at PX producers’ facilities.

Focus article by Samuel Wong