PX market review for H1 2024

1. PX price

In the first half of 2024, PX price averaged $1033/mt CFR China, little changed from $1032/mt CFR in the same period of 2023. The price hit its low point of $1001/mt on May 14 and high point of $1070/mt on Apr 16 and Apr 17 in the first half of 2024, with price difference down to $69/mt, compared to $212/mt in the same period of 2023.

PX price was less volatile, with the fluctuation rate down from 5.1% in H1 2023 to 1.5% in H1 2024. PX price was weighed by high plant operating rate and increasing supply this year, and the rise was capped by weaker gasoline blending demand, compared to last year. However, with the support from new PTA capacity in the first half of 2024, PX price did not drop to below $1000/mt CFR.

2. PX processing spread

PX-naphtha price spread average $347/mt in H1 2024, down 10.3% from the same period last year. It hit the high point of $382/mt on Jun 8, and low point of $292.5/mt on Mar 8.

PX-MX price spread squeezed before rebounding. It averaged $70/mt in the first half year, down 2.8% on year, while hitting the high point of $112/mt on Jun 26 and low point of $19/mt on May 2. Due to severe losses, some plants based on MX outside China turned to cutting operating rates or shutting down. The situation was relatively better in China domestic market while some units still reduced operating rates.

PX-naphtha spread did not break through $400/mt, as it did in 2023. Firstly, China PX inventory continued rising since Oct 2023 till Mar 2024, resulted in ample supply which weighed on PX prices. Secondly, naphtha supply to Northeast Asia has been under disruptions since the beginning of 2024. Russia-Ukraine conflict and Middle East tension continued affecting naphtha production as well as the transportation, driving up naphtha prices. Arbitrage goods from Europe to Asia also decreased. Therefore, PX-naphtha price spread squeezed due to resilience in naphtha price.

PX-MX spread was still impacted by gasoline blending expectation. In Jan-Apr 2024, South Korea exported up to 108kt of MX to the US, up 125% from the same period of last year. MX price was driven up by the speculations of gasoline blending demand from the US. However, with the approaching of consumption season, US gasoline stocks increased while blending demand was weak. As a result, Asian MX price fell back while PX-MX spread rebounded.

3. Plant operation

In Jan-Jun 2024, China and Asian PX plant operating rate pulled back from highs. China operating rate averaged about 81% in the first half of 2024, up nearly 7 percentage points on year. It even recorded 85% in the first quarter, new high in recent years. Asian plant operating rate average 74%, up 5 percentage points. As gasoline blending economics weakened, demand for MX reduced and thus PX-MX spread widened, incentive to PX plant operations. In addition, China benzene price was strong, and therefore PX production increased amid good TDP margins. In the second quarter of 2024, however, PX plant operating rate nosedived due to scheduled maintenance coupled with unexpected plant issues, to low points of 68.8% in China and 65.7% in Asia. Then. It rebounded gradually, with plants getting restarted.

4. PX imports

In Jan-May 2024, China PX imports reached 3.83 million tons, up 30kt or 0.9% on year. The imports were relatively stable, averaging 765kt per month in the first half year, while hitting low of 691kt in Mar. The dependency rate on imports (imports/total supply) dropped to 20% in Jan-May, down 3 percentage points on year, mainly because of increasing domestic production.

5. Supply-demand gap

In Jan-Jun, China PX inventory continued increasing in the first quarter, indicating supply growth outpacing that of demand, while in the second quarter, the inventory reduced obviously. There was no new PX capacity in the first half of 2024, but PX plant had been keeping high operating rates since the beginning of the year. As a result, China domestic production increased a whopping 30% to 3.16 million tons in the first quarter, indicating an increase of inventory of more than 400kt.

In the second quarter, the production decreased, down by 9% from the quarter earlier to 2.87 million tons, due to frequent plant issues. However, demand picked up, as FCFC Ningbo started its new 1.5 mln mt/yr PTA plant in end-Mar, Sinopec Yizheng started its new 3 mln mt/yr line in early Apr, and Hanbang's long-idled 2.2 mln mt/yr line as well as Pengwei's 900kt/yr line got restarted in end-May and end-Jun respectively. PX inventory decreased by nearly 500kt in the second quarter, and the overall inventory reduced in the first half of 2024.