PX supply growth slowed down by unplanned plant disruptions

In Aug, Asian PX market was dragged down by decline in crude oil, recovery of supply, as well as bleak economic sentiment. As of Aug 23, CFR China PX price fell by 7.9% from the beginning of the month to $929/mt, hitting nearly 2-year low. PX-naphtha spread also squeezed sharply to $260/mt.

China domestic PX supply increased and plant operating rate hovered high, and also the recovery of USD cargoes prompted short-selling sentiment. PX was in the lack of advancing momentum, as plant turnarounds in the fourth quarter have not yet begun.

Recently, some disruptions to PX plant operations occurred out of expectation.

Several plants in and outside China are said to conduct temporary maintenance or production cuts. Though the duration is not long, it would affect PX supply and demand balance. The production loss on account of unexpected plant disruptions is anticipated to reach 110kt in Aug and Sep in China. Though the imports of USD cargoes could increase, China PX inventory is expected to reduce in Sep.

In Oct, there're two PX plants in China expected to undergo maintenance, but PTA plant turnaround plan is uncertain and some company may postpone the maintenance. Therefore, the pressure on PX could get relieved or the rise in inventory could come later than earlier expected.

It reminds us the situation in the second quarter this year, the turnaround season for PX plants. In that quarter, production loss owing to planned maintenance amounted to 1.4 million tons, and on account of unexpected shutdowns, the loss exceeded 600kt. As a result, PX inventory reduced heavily, affecting the market movement.

In late Aug, unexpected plant disruptions are heard frequently. But this time, PX plant operating rate remains high, and the disruptions encounter mostly in China, unlike the situation in the second quarter. In addition, this round of PX price slump is also attributed to increasing USD cargoes especially in spot market.

As PX-naphtha spread has been squeezed to approach $250/mt, whether the exports from Middle East would be affected need to be seen. And the impact on plant operations should be watched closely. However, as the economics of aromatics production in the refineries remain acceptable, it would take time to affect PX plant oeprations.