China mixed xylenes prices keep the resilience in July

In Jul, most aromatics product prices pulled back, except for MX price which kept relatively firm throughout the month in Chinese market. Benzene price declined heavily with supply increasing. Toluene price dropped from 7600yuan/mt in the beginning of Jul to 7320yuan/mt on Jul 29 in East China. However, domestic MX price kept consolidation in the range of 7800-7900yuan/mt for much of the month. In addition, Asian toluene and MX prices on FOB Korea basis also moved down persistently in Jul.

Then, why did domestic MX kept the resilience? Firstly, some plants, undergoing maintenance earlier, delayed the restarts, and some began maintenance in Jul, leading to tight supply of MX. Secondly, tank inventory of MX kept reducing, with fewer cargoes arriving, supportive to the price. Thirdly, refineries raised MX prices in some periods with the uptick in gasoline blending demand in early Jul.

Hubei Jin'ao, Zhenghe Petrochemical and Changyi Petrochemical have postponed plant restarts. Sinopec Guangzhou and North Huajin began maintenance in Jul. MX supply in Shandong was tight with production reduction due to intensive plant maintenance. In South China, two big plants, Sinopec Maoming and Sinopec Guangzhou underwent maintenance, which led to supply contraction.

Domestic material availability is tight. Though the imported volume of MX increased in the first half of Jul, the goods mainly went to downstream plants while the volume of goods to tanks at reserve areas in coastal regions was small. Therefore, tank inventory has reduced continuously from 40kt in the beginning of Jul to about 28.7kt as of Jul 17.

Gasoline consumption peak began in summer. In Jul, The sales to production ratio of toluene and mixed xylenes from refineries in Shandong approached 110%. Besides, the pickup of goods at eastern coastal regions has also accelerated. In addition, with fewer cargoes arriving, tank inventory of MX at East China kept reducing.

In a conclusion, MX price got supported by plant turnarounds, tight supply and low inventory, as well as gasoline blending demand in Jul. However, with plants restarting, MX price has shown signs of correction. In addition, weak blending demand in late Jul and PX unit operating rate cut also weighed on MX prices.