Asia PX may extend falls on long supply, bearish sentiment

20 September 2016 05:25 Source:ICIS News

Qingdao port in China

SINGAPORE (ICIS)--Paraxylene (PX) prices in Asia are being dampened by strong availability of spot cargoes from India, Singapore, the Middle East and the US, traders said on Tuesday.

Traders were largely seeking to offload October and November-shipment cargoes in a bearish spot market with limited buyers.

On 16 September, spot PX prices were assessed at $786/tonne CFR (cost and freight)  China and/or Taiwan, down by 4.0% from 19 August, according to ICIS data.

Cargoes offered on floating and formula pricing were fetching deeper discounts to daily average prices from previous weeks. Those not originating from northeast Asia were being offered at discounts of $2-3/tonne to daily average prices.

Demand has been weak, with the start of the lull season for downstream polyethylene terephthalate (PET) bottles in the US, leading to more arbitrage PX cargoes moving east from US, industry sources said.

The US cargoes were being offered to the Asian spot market for November arrivals, but only a few physical outlets are available.

They would likely head to Chinese ports, which can accommodate bigger vessels carrying deep-sea cargoes, market sources said.

Downstream demand remains thin, with two major end-users in China offering feedstock PX cargoes instead to the spot market amid turnarounds at their downstream purified terephthalic acid (PTA) plants.

Hengli Petrochemical has a scheduled maintenance at its 2.2m tonne/year No 2 PTA line in Dalian in the first-half of October and is mulling a November turnaround at its No 3 line at the site that also has a 2.2m tonne/year capacity.

Yisheng Petrochemical’s 2m tonne/year Hainan PTA line is also undergoing turnaround and is expected to restart in the week of 24 September.

Another major Chinese PTA producer is mulling a turnaround toward the end of the year but not specific dates have been set, market sources said.

Among PX plants, SK Global Chemical’s 1.3m tonne/year PX line in Incheon, South Korea, has started a six-week long turnaround from 19 September, while the 1m tonne/year PX plant operated by Ulsan Aromatics –  a joint venture between JX Nippon Oil & Energy and SKGC – is due for a 14-day turnaround from mid-November.

In Japan, Idemitsu Kosan’s 214,000 tonne/year Tokuyama PX line is also currently undergoing maintenance.

Meanwhile, other integrated and naphtha-based PX producers in Asia are continuing to operate their plants at high rates, while in India, Reliance Industries expects to start up its new 2.2 m tonne/year PX unit in Jamnagar in mid-October.

With fresh supply hitting India next month, Middle East-origin PX cargoes are likely to flow to end-users in southeast and northeast Asia, market sources said.

In Singapore, Jurong Aromatics Corporation (JAC) is running its 800,000 tonne/year PX unit smoothly, with various traders offering cargoes to China and southeast Asia, market sources said.

Meanwhile, South Korea’s Lotte Chemical and Hyundai Cosmo Petrochemical are expected to boost PX production in November, on increased availability of feedstock with the scheduled start-up of Hyundai Chemical’s new 1m tonne/year new isomer-mixed xylene unit.

Focus article by Paul Lim

PX CFR China, Taiwan 20 September 2016

Photo: Container ships docked at Qingdao port in China (Source: Imaginechina/REX/Shutterstock)

By Paul Lim