Asia PX supply to lengthen on weak demand, new capacities

SINGAPORE (ICIS)–The Asian paraxylene (PX) market is unlikely to elude a longer supply going forward as demand will stay weak while new capacities are due to come on stream before the end of the year.

Production margins of downstream purified terephthalic acid (PTA) are being squeezed, as shown by the downward trajectory of the PTA-PX price spread.

Consequently, several PTA producers in China are planning to shut their facilities for maintenance.

Upcoming PTA turnarounds in the country include Hengli Petrochemical’s 2.2m tonne/year unit in first-half October for 15 days; and Hanbang Jiangyin Petrochemical’s 2.2m tonne/year PTA unit in end-October for 15-20 days.

In mid-November, Oriental Petrochemical’s 700,000 tonne/year unit is due to shut for around 15 days.

A number of PTA facilities in Asia are also currently shut for maintenance.

Asia will likely see a PTA production loss in October and November of around 313,000 tonnes, which will translate to a PX demand loss of around 207,000 tonnes over the same period, according to ICIS Supply & Demand data.

A textile factory at Jiangyin in east China’s Jiangsu Province (Source: Sipa Asia/Shutterstock)

A weak global macroeconomic environment has kept market participants cautious despite the approach of the traditional downstream polyester peak demand season in October.

“It is expected that the peak season for partially oriented yarn (POY) to be shorter than usual because cloth inventory level in east China is much higher than that in the previous two years owing to the US-China trade war and weak global economy,” said ICIS analyst Jimmy Zhang.

A weak downstream polyester market will be a burden to PTA operating rates, and thus limiting demand for PX.

Furthermore, PX supply in Asia is due to lengthen as new PX capacities are gearing for start-up.

In China, Sinopec Hainan is targeting to start selling product from its new 1m tonne/year PX facility in October, while Hengyi Petrochemicals is targeting to start up its new 1.5m tonne/year unit in late October.

Zhejiang Petrochemical’s new 4m tonne/year PX facility is scheduled to begin production by the end of the year.

Focus article by Samuel Wong

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