The hottest overcapacity in Asia, weak demand in E

Overcapacity in Asia and weak demand in Europe! The outlook of the global PX market is worrying

Asia has overcapacity and European demand is weak! The prospect of the global PX market is worrying

December 8, 2020

according to Platts energy information on November 30, market participants said that the global paraxylene (PX) market will still focus on Asia next year, especially China. Although the new downstream capacity in Asia will temporarily absorb the excess PX supply, a large number of new PX capacity in the region will also be put into production. In addition, there is still uncertainty about the prospects for global economic recovery under the COVID-19, so the market oversupply situation will continue. Analysts' expectations for the PX market in 2021 are not optimistic, because the recovery of the economy from the pandemic is the main factor affecting the PX spot price and market fundamentals

the Asian market will still be oversupplied

market participants predict that the oversupply in the Asian PX market will continue until the first half of 2021. This is bad news for PX manufacturers, because they have experienced a particularly difficult 2020. Nevertheless, market participants predict that the fundamentals of the PX market in 2021, especially in the first quarter, may improve due to tight supply and demand caused by the new capacity of purified terephthalic acid (PTA)

as the production profit margin has been lower than the breakeven level for a long time, the operating rate of PX units in Asia has declined, and the supply and demand are rebalancing. However, market participants said that despite the poor economic environment, there was a limit to the decline in the operating rate of PX unit due to the demand for gasoline blending and the need for refineries to ensure the internal hydrogen supply of upstream production 2 and desulfurization of products with good fusion with 372 plexiglass. A South Asian market person said that the reduction in market supply may not be enough to effectively reduce the current degree of oversupply in the market. A trader said that only when the gasoline market changes significantly, or the polyolefin profit margin decreases, and the overall operating rate of refineries decreases, will there be a greater decline in PX production

the new demand for PX brought by China's new PTA capacity will also help to absorb the excess supply of PX in the first quarter of 2021. This includes the PTA capacity of 2.5 million tons/year of Fujian Baihong petrochemical, 2.4 million tons/year of Jiangsu Shenghong petrochemical and 3 million tons/year of Ningbo Yisheng petrochemical. According to the calculation of S & P global Platts energy, these new PTA production capacities generate about 5.25 million tons/year of PX demand

however, all the attention of PX market is focused on the production of wood plastic products of Zhejiang Petrochemical phase II project than pure plastic or pure wood. The project will increase the PX supply of 5million tons per year from the end of the first quarter to the beginning of the second quarter of 2021, which will bring pressure to the PX market, which is trying to rebalance, and keep the supply and demand situation relatively unchanged since 2020. In addition, Saudi Aramco's 850000 ton/year PX plant in Gizan, Saudi Arabia, will be put into operation from the second quarter to the third quarter of 2021, which will also bring new supply to the market. An Asian PX manufacturer said that the good start of 2021 due to increased demand may be short-lived. Once the second phase project of Zhejiang Petrochemical is put into operation, the pressure of oversupply in the PX market may reappear

weak demand in the European market

a European trader said that market participants usually reserve PX goods in winter and spring for the peak demand in summer, but the market situation in 2021 may be different due to the COVID-19. Many market participants predict that the only export market for PX goods in Europe will be the United States. The situation may not change at the beginning of 2021, because the demand in Europe is weak and PX will be oversupplied

some market participants believe that PX manufacturers outside China should focus on rationalizing production to achieve market rebalancing. The long-term recovery of PX production profit margin may be difficult, because if the production profit performance is stable and reliable, and the profit margin rebounds, there is enough capacity to improve the operating rate or restart production

factors such as the launch of covid-19 vaccine and the recovery pace of the terminal industry after the pandemic have increased the uncertainty of market demand. At the same time, European market participants are busy dealing with excess inventory. Precautions and characteristics for the use of pre rubber tensile strength testing machine. Considering that China's new PTA capacity has little impact on its market

the U.S. market is under pressure

from 2019 to 2021, the growth of PX production capacity in Asia has affected the price of PX in the global market, including the North American market. PX producers in the United States struggled throughout the third quarter, mainly because the planned and unplanned shutdown of mixed xylene (MX) production units along the Gulf coast of the United States led to strong MX price growth (MX is the main raw material for PX production), which had a negative impact on the economy of PX production. In the third quarter, the average spot price difference between PX and MX in the United States was only slightly higher than $56/ton, lower than the breakeven point

in addition, market participants said that the PX output of toluene conversion unit in 2020 was very small, because the profit margin of selective toluene disproportionation (STDP) was often negative, and the economic situation was unlikely to improve in 2021. U.S. PX manufacturers may continue to compete with low-cost imports along the Atlantic coast of the United States. From 2019 to the middle of the fourth quarter of 2020, the PX import volume of the United States increased significantly by 45%

the source said that in the second quarter, the PX import cost of the east coast of the United States was lower than that of the Gulf coast of the United States. With the reduction of operating rate or shutdown of PX devices in other regions, PX prices in the United States may ease in 2021, but the prospect is still not optimistic