OUTLOOK ’19: Asian PX trade to US likely to increase amid shifting production

HOUSTON (ICIS)–Asian paraxylene (PX) trade to the US is likely to increase in 2019 amid shifting production levels in both regions.

Supply is expected to tighten in the first quarter amid refinery maintenance season, putting upward pressure on prices in early 2019.

However, the most significant impact on US supply will be the closing of Chevron Phillips Chemical’s PX plant in Pascagoula, Mississippi.

The company announced the plans to close the plant, which is the company’s only PX unit, in early December and plans to leave the business by the end of 2018.

The company said it is leaving the business because it is not material to the company’s financial results.

Although the plant has a capacity of 495,000 tonnes/year, representing over 10% of North American capacity, the plant only represents approximately 1% of total capacity in the global market.

US PX plants

COMPANY	SITE	CAPACITY (000 tonnes)
ExxonMobil	Baytown, TX	545
	Beaumont, TX	275
Flint Hills Resources	Corpus Christi, TX	590
Indorama Ventures	Decatur, AL	1,000
BP Chemicals	Texas City, TX	1,200
Chevron Phillips Chemical	Pascagoula, MS	495

The PX produced by the plant was used primarily in the production of polyester in swimsuits and high-performance athletic wear in a domestic market increasingly moving toward the production of polyethylene terephthalate (PET).

The closure of CP Chem’s PX plant provides opportunities for Asia to export their PX volume, especially on the back of PX capacity expansions within Asia.

In 2017, South Korea exported a total of around 114,000 tonnes, up 11.8% compared to the previous year, according to customs data.

From January 2018 to October 2018, South Korea has exported around 103,000 tonnes to the US, according to the same data.

Moreover, there are two new mega refinery-based PX projects in China that are scheduled for startup in 2019, adding a total of around 8.5m tonnes/year of new PX supply.

Along with increased PX capacity in the global market comes increased demand for purified terephthalic acid (PTA) demand for use in the polyester fibres and PET markets, particularly in Asia.

The US is likely to become increasingly dependent on imports from Asia in order to produce PTA amid the recently lost capacity as well as no new plans to expand production in the domestic market.

This is likely to put upward pressure on US PX prices in 2019.

One variable will be the price of crude and naphtha values in the global market. Higher prices are expected to add to upward volatility, while lower prices could moderate pricing throughout the year.

PX is used to produce PTA, which is an intermediate in the production of PET. Major producers of US PX are BP, Chevron Phillips Chemical, ExxonMobil, Flint Hills Resources and Indorama.

Focus article by Lucas Hall

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