PX prices propped up by disruptions to plant operations

PX price began rebounding in mid-May. As of May 27, the price has advanced to $1044/mt CFR. As a result, PX-naphtha price spread has widened to hit this year's high point of $374.5/mt on May 24.

China and Asia PX plant operating rate had risen to hit 5-year high of 87.1% in end-Mar. The increasing inventory as well as ample supply expectation weighed on PX price earlier, which was relatively weak compared to the same period of last year. Meanwhile, the extent of plant turnarounds in 2024 was smaller than that in last year, which led to slower reduction of inventory in Apr and May compared to the same period of last year.

Since Apr, however, unexpected disruptions to PX plant operations have happened more than expected. PetroChina Guangdong cut PX plant operating rate in early Apr. Zhejiang Petroleum&Chemical (ZPC) underwent unplanned maintenance in Apr and May due to troubles. South Korea's S-Oil and GS either shut or cut operating rate in Apr. In May, China's Fuhaichuang, Saudi Arabia's Rabigh and Aromatics Malaysia shut their PX lines unexpectedly.

In addition, the economics of PX based on MX have worsened in China, and therefore, some PX producer suspended purchasing MX and lowered PX operating rate.

Scheduled turnarounds

Due to planned maintenance coupled with unexpected shutdowns and production cuts, it is difficult for China and Asia PX plant operating rates to recover to the high seen in the first quarter, and PX supply is tightening.

With supply reduction, discussing prices for PX spots recover to some extent. Jun physical goods were traded at discount of $4/mt to formula pricing in late Apr, but the discount widened to $5/mt in early May. Jul goods were transacted at discount of $2/mt to formula pricing in early May, but at a premium of $0.75/mt in mid-May.

On overall basis, the frequent plant issues lead to accelerating of inventory reduction. However, the support from short-lived disruptions would not be solid. Downstream PTA plant operations and demand for PX, as well as gasoline demand during travelling peak should be watched closely.