Since mid-July, the PX market in Asia as a whole has risen and fell. This week, the rebound in the price of crude oil ** was boosted to US$ 1,536. The average price in the domestic market is now around 9,000 yuan. The suspension of production of the Fujia Dahua project will further tighten the already tight supply market, and will also boost domestic PX prices, reinforcing the foundation for returning to the upward path.
Sudden supply reduction stimulus prices On 11 July, a fire broke out at the CNOOC Huizhou Refinery, which resulted in the suspension of production of its aromatics plant. The supporting 800,000-tonne-per-year PX plant also stopped production, and production has yet to resume. After the fire broke out in the early morning of July 30 at Formosa Petrochemical's Liuguang Oil Refinery, the Taiwan authorities ordered the shutdown of the Maijing refinery and the petrochemical complex for a thorough security inspection. Formosa Plastics & Chemicals' No. 2 and No. 3 units faced the possibility of closure. The company has a 1.72 million tons/year PX production facility to supply its terephthalic acid (PTA) production, adding a total capacity of close to 2.9 million tons/year. The production capacity of Fujia Dahua PX Project is 700,000 tons/year, accounting for about 8% of the country's total production capacity. The fact that the plant was ordered to suspend production has been aggravated by the fact that the supply has been drastically reduced. The price increase of PX will be overwhelming.
At present, the domestic PX production capacity has reached the limit, and once the supply reduction occurs, it can only rely on imports to make up for the shortfall. However, it is rumored that the 820,000 tonne/year PX unit at Kuwait Petroleum and Chemical Industries Corp.’s Shuaibai Port may close for three weeks in October. The company typically exports about 70,000 tons of PX per month to Asian end-users and traders. A source said that at present it has reduced the contractual allocation to users, reducing the shipment from August to September by 1/3. The news triggered some market participants worried about tight cargoes in October.
Demand release was boosted by the impact of typhoon "Plum Blossom". Yisheng Petrochemical's annual output of 3.3 million tons of PTA plant in Ningbo was shut down due to mechanical failure. It is expected that it will be put into operation this weekend; Formosa Plastics & Chemicals Co., Ltd. closed in Ningbo on July 29th. The PTA unit, which has an annual capacity of 600,000 tons/year, will also restart this weekend. Will release a large amount of PX demand, further boost the PX's heat.
Although the installation of the PTA plant will be more extensive from August to September, the output of the original plant will be reduced, but the production of a new 1.2 million-ton/year plant at Sanfang Lane in Jiangsu will make up for the reduction. At the same time, in the third quarter, there will be 3.9 million tons of PTA new capacity released in the country, and the monthly demand for PX will increase by 210,000 tons. The decrease in supply and increase in demand have pushed up the PX market and also made the PX price exceptionally resilient.
At present, the PTA price is around US$1,244 (CFR China). Although downstream manufacturers are relatively resistant to high prices, most of them hold a wait-and-see attitude. However, with the arrival of the peak season for the polyester industry in September, the inventory level of manufacturers gradually declines under full-load operation of the equipment. Market participants will return to the market to purchase, which may further increase the price of PTA, at least keep it at the current high level, and will also play a good supporting role for the price of PX.
Consolidation of fundamentals to boost confidence As of August 15, Asian PX market prices rose by 30 US dollars, rose to 1538 US dollars (FOB Korea) and 1558 US dollars (CFR Taiwan/Ningbo). The September delivery price gap in the market widened, and the Asian supply market bid price was $1530 (CFR Taiwan/Ningbo), and the market offer price rose to $1560 (CFR Taiwan/Ningbo). The higher external disk prices have a good driving effect on the domestic market.
Last Friday, New York crude oil fell 0.34 US dollars in September, to close at 85.38 US dollars / barrel; Brent rose 0.01 US dollars in September, to close at 108.03 US dollars / barrel. Although the road to further rebound in oil prices has been hampered, the end of the previous downtrend and the start of stabilization have served to appease the confidence of PX market players.
On the afternoon of August 14, the Dalian Municipal Government announced that due to the typhoon “Plum Blossom†on August 8th, the Fujia Dahua PX project that was almost caused by a toxic chemical gas leakage accident was immediately stopped production and relocated, in the domestic PX. The market stirred up awkward.