O-xylene continues weak and stable pattern

Since this year, due to factors such as the collapse of upstream costs and the downturn of the downstream market, the domestic o-xylene market prices have continued to decline. As of the beginning of April, the domestic o-xylene market quotations fell to about 4,800 CNY/ton, down 1,700 CNY/ton from the beginning of the year, a drop of about 26%.



For the later trend, industry analysts believe that at present, there are few new or expansion projects of o-xylene in China, and the supply remains stable, while the main downstream phthalic anhydride is still under construction or planned projects, and the demand for o-xylene is expected to increase. However, due to environmental protection factors, the production capacity of phthalic anhydride may be limited, and the export situation is not good this year. The overall pattern of o-xylene is expected to be mainly weak and stable.



From the point of view of supply, since the production of o-xylene is generally an aromatics combined plant, the overall investment scale is large and the process is complex, it is difficult for general enterprises to bear, the future capacity growth is not obvious, and some small capacity plants may be phased out. According to the online statistics of Chemical Industry, as of the end of 2019, the domestic production capacity of o-xylene was 1.58 million tons, only 100,000 tons / year of Hainan Refining & Chemical was put into operation during the year, and Liaoyang Petrochemical was expanded from 60,000 tons / year to 14 The 10,000-ton / year device was put into operation, and the production capacity increased by 180,000-ton / year. In the next few years, there will be few new or expansion projects of o-xylene in China, and the overall domestic production capacity pattern will remain stable.



From the perspective of demand, o-xylene is mainly used for the production of phthalic anhydride, dyes and pesticides. Among them, about 95% of o-xylene is used to produce phthalic anhydride. At present, there are still some phthalic anhydride projects planned or under construction in China, and the demand for o-xylene is expected to continue to grow. However, it is worth noting that, as China continues to maintain a high environmental protection trend, the downstream phthalic anhydride operating rate may be restricted, which directly affects the demand for o-xylene. At the same time, naphthalene phthalic anhydride has an impact on o-phthalic anhydride, or it may cause a certain shrinkage of the demand for o-xylene. In addition, under the environmental protection requirements, the downstream DOP market of phthalic anhydride is squeezed by environmentally friendly plasticizers, and the reduced demand will also be transmitted to o-xylene. Based on the above factors, on the whole, the consumption of o-xylene declined slowly.



In terms of imports and exports, due to the depreciation of the renminbi in 2019, the import cost of o-xylene increased and the import volume decreased. At the same time, due to the declining domestic demand, as well as the weakening market prices and the emergence of arbitrage space inside and outside, some factories and traders choose to export to seek new business opportunities, so that the total export of o-xylene in 2019 will increase significantly compared with previous years. According to the data released by the General Administration of Customs, domestic imports of o-xylene in 2019 were about 65,000 tons, a significant decrease of 75.2% from the same period in 2018; the total annual export volume was about 25,000 tons, an increase of about 19,000 tons from 2018. The increase is as high as 317%. However, judging from this year, the outbreak of new pneumonia in foreign countries has spread, and the export of o-xylene may be subject to certain restrictions, which will bring certain pressure to the domestic market.