Asian PX prices boosted by demand recovery

Asian paraxylene (PX) prices trended higher in January, buoyed by China's adjustments to its COVID-19 policy and U.S. gasoline blenders bracing for summer demand. According to Platts energy assessment data under S&P Global, on January 30, the Asian PX mark price closed at US$1,082/ton, up 15% from US$939.83/ton on January 4, and from US$890 on December 7 last year. / ton rose 22% from its low point.

In December last year, after China adjusted the control measures for the new crown epidemic, the market generally placed high hopes on the rebound in demand for PX and other aromatics in China, especially after the Chinese New Year. The market is expected to rebound strongly. A Singapore-based trader said that low inventories of PX in China have been driving up demand, and buying interest is expected to continue to strengthen in the coming weeks. "Everyone is expecting Chinese buyers to come back," the trader said.

According to some market sources, after the Spring Festival holiday, the operating rate of refined terephthalic acid (PTA) in downstream Northeast Asia has increased to 75%, and the operating rate of polyester has increased to 64%, and it is expected to further increase in the next few weeks . A trader in Northeast Asia told S&P Global that based on China's low PX inventory and strong demand for polyester, the operating rate of its polyester factories may have exceeded 75%. Another Northeast Asian trader was more cautious, noting that he hadn't seen a significant recovery in retail demand in the region. “We are looking at downstream products such as furniture and clothing,” he said. Also, some brokers said that as more ships carrying aromatics were sent to the United States, rising market sentiment could affect freight rates.

The market is also looking forward to the demand for benzene, m-xylene and PX as blending components and octane boosters, especially in the US market. "If the U.S. uses aromatics for gasoline blending and the Chinese market opens up further, the two largest economies will drive a stronger PX market," said a Singapore-based trader. Large volumes of aromatics cargoes are locked in term supply contracts, and buyers in the United States have begun looking to buy gasoline blends amid fears of tight supplies and higher prices.

In other aromatics, ethylbenzene, a precursor to styrene, is also used as an octane booster in the U.S., market sources said, however, shipments of ethylbenzene from Asia to the U.S. are constrained by bulk handling capacity, making styrene Producers cannot profit from potential arbitrage opportunities. In terms of pure benzene, sources reported that due to sufficient pure benzene in Asia, a large amount of pure benzene in this region will be exported, while the supply of pure benzene is still tight. On January 26, the price of pure benzene in the United States was assessed at 375 cents/gallon, the highest value in five months, although it was far below the record peak of 701 cents/gallon on June 16, 2022. Part of the time is up. Low U.S. gasoline inventories are also contributing to the current market optimism, market sources said. According to the U.S. Energy Information Administration (EIA), U.S. gasoline inventories closed at 232,022 barrels in the week ended Jan. 20, well below the previous five-year average.