2025 PX term contract concluding, spot selling pressure could get relieved

Since mid-Nov, PX price has been remaining weak, but it could find support at around $800/mt CFR China.

On the cost side, Brent crude oil futures price get supported at around $70/bbl. PX-naphtha price spread has been hovering low at around $180/mt. Under this spread, most plants, except for those new and large ones, are pressured by losses.

In the near future, PX price could get bolstered.

Firstly, though CNOOC Daxie has restarted its PX plant and will ramp up the operating rate, China PX production increase in Dec could be limited, as several plants, such as GS Qingdao Lidong, CNOOC Huizhou and Weilian Chemical, cut operating rate in Dec, and in addition, Sinopec Fujian will probably postpone the restart of its PX plant till end of Dec.

Secondly, PX economics based on MX have been squeezed. Recently, PX-MX price spread on FOB Korea basis widens slightly, but it is at around or even below $80/mt, indicating meager profit for PX units based on MX. Whether such low spread could result in PX operating rate cuts should be watched closely.

Thirdly, PX spot selling pressure could be less strong. In 2024, PX spot is under profound selling pressure, due to low contract ratio, large supply as well as limited storage space. And therefore, suppliers have to lower prices to sell. As for 2025 materials, it is heard that most suppliers based in Japan and South Korea, two largest origins of China PX imports, have reached contracts with downstream buyers at around -$8/mt. Under this circumstance, the selling pressure in spot market could get alleviated. But contract negotiation with suppliers from Middle East and other regions should also be focused on.

In a conclusion, unless crude oil prices decline drastically, the pressure on PX from its fundamentals could be relieved.

However, it is also difficult for PX price to rebound substantially in the short term, due to the lack of advancing momentum. With the nearing of Chinese Lunar New Year, polyester and downstream weaving plants would gradually cut operating rate, affecting the demand for upstream products. In addition, with limited plant turnarounds in the first quarter, supply of PX could be on the high side.