Beijing November 9 2021: Asian PX prices are likely to continue taking directional cues from related markets this week, while the spread between paraxylene and naphtha remains under pressure from weak demand according to S&P Global.
Market sentiment is expected to remain weak amid amply PX supply and thin buying appetite. The market is also monitoring progress in the ramp-up of Zhejiang Petrochemical’s PX units, which may be slightly delayed.
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Paraxylene (PX) prices, at the start of the previous quarter, uncharacteristically did not follow the trend of the upstream Crude Oil market and exhibited bullishness. Delays in the start-up of a 2.2 million MTs new PX capacity in China ignited the market sentiment, boosting prices for prompt supply. However, towards the second half of the quarter, prices fell due to weak downstream demand coupled with the resurgence of the Covid-19 virus in China. Additionally, on-spec production from the aforementioned new PX plant added length to the market. Thereafter, despite improvement in the Crude Oil market, the prices failed to recover as downstream PTA and polyester markets in China lowered operating rates to cater to the government’s energy-saving objectives. The average PX price for the quarter was US$ 920 per metric tonne while the PX-Naptha spread averaged at US$ 247 per tonne.
As the third quarter commenced, PTA prices followed the trend of the upstream PX market. However, the resurgence of Covid-19 cases in China and its imposition of a zero-tolerance policy resulted in a drastic decrease in downstream demand and an inevitable inventory build-up which weakened the prices ensuing squeezed PTA-PX spot margins. Additionally, producers were forced to rationalize operations to balance the supply/demand equation as well as to comply with China’s environment related dual control policy. Towards the end of the quarter, industry resisted downward pricing trend to cope with the Acetic Acid prices which nearly doubled from the start of the year.
The average PTA price for the third quarter was US$ 708 per metric tonne, whereas, the average PTA margin over PX for the quarter was US$ 101 per metric tonne.
