South Korea and Japan PX plant operating rate forecast for H1'24

In 2023, South Korea exported about 4.86 million tons of PX, down 7.4% on year; and Japan exported 2.17 million tons, down 4% on year. PX plant operations in South Korea and Japan were affected by reduced dependence on PX imports in China as well as gasoline blending demand. Then, let's take a look at the prospect of plant operating rates in South Korea and Japan during Jan-Jun 2024, as plant turnarounds will concentrates in the first half year.

In 2023, PX exports of South Korea and Japan to Chinese mainland decreased by 7.7% and 5.8% on year respectively, as China's appetite for PX imports reduced. Also because of gasoline blending demand, refineries in South Korea allocated more toluene and MX into gasoline pool while reducing that for PX production, and therefore, PX plant operations were affected by lower feedstock availability. The situation in Japan was different. PX plant operating rate ticked up instead in the first half of 2023, as the arbitrage trading of toluene and MX was not active.

During Jan-Jun 2023, the average operating rate of PX plants in South Korea dropped by 8 percentage points to 70%, while that in Japan increased slightly by 3 percentage points to 67%.

South Korea's GS shut one 550kt/yr line on Feb 25 for maintenance and another 400kt/yr line was shut lately for 40-day maintenance. In later period, some producers such as SK and Hanwha would undergo maintenance. The operating rate of PX plants in the first half of 2024 could be little changed from the same period of last year, and the production loss would reach only some ten thousand tons.

In Japan, PX plant operating rate is estimated to drop by 5 percentage points to 60% during Jan-Jun 2024. ENEOS has shut one 350kt/yr line in late Feb for maintenance, and its 290kt/yr line has suspended production since Oct 2023. As a result, PX exports from Japan are expected to decrease in the first half of 2024.

In a conclusion, though plant maintenance would be limited during this year's turnaround season. PX production from South Korea and Japan would somewhat decrease. However, the supply in Asian market is ample due to high plant operating rate since the last quarter of 2023, and it would be difficult for spot price to find advancing momentum, only relying on scheduled plant turnarounds.