Asian PX falls to record low amid weak macroeconomics

Author: Samuel Wong

2020/03/16

SINGAPORE (ICIS)--Asian paraxylene (PX) prices fell to lows last seen in 2008, amid weaker upstream crude and naphtha values.

ICIS Editorial Chart goes here

PX prices fell to below $600/tonne CFR (cost & freight) China/Taiwan on 16 March, compared with $614-616/tonne CFR China/Taiwan on 13 March, according to ICIS data.

A June deal was concluded at $581/tonne CFR China/Taiwan on 16 March.

The pace of decline in the upstream naphtha markets was faster compared with PX price movements, thus widening the PX and naphtha price gap.

As seen from the chart above, the price differential between both products improved recently, following the downward trend since October 2019.

In addition, co-product benzene prices were also outperforming naphtha prices.

As a result, the combination of the price differential between PX and naphtha, and benzene and naphtha had gone above $500/tonne, as shown in the chart above.

This signifies that chemical reforming margins are relatively healthy.

Falling upstream naphtha and energy markets, coupled with stable-to-weak demand as a result of a bearish macroeconomic environment is increasing the risk for producers to face inventory losses, despite healthy margins.

Off-take of products are likely to be kept at minimal, with purchases largely to kept on a need-to basis.

Focus article by Samuel Wong