Tight supply Asian paraxylene prices hit 21-month high

On February 25, the Asian PX price hit a 21-month high, reported at US$895.83/ton CFR China. The reason was that a number of factories had failed since the beginning of the year and the supply was tight.

　　Data shows that since the beginning of this month, the price has jumped by US$172.66/ton, an increase of 23.9%. The last time the price high occurred on May 27, 2019, the price was US$896.25/ton CFR China.

　　 As the price of PX increased more than the raw material naphtha, on February 25, the price difference between the two widened to a 10-month high of US$286.21/ton, in sharp contrast with the average of US$150.66/ton in the second half of last year. Data show that the last time the PX-naphtha spread was expanded was on April 13, 2020, at US$291.17/ton.

　　 Boosted by the rise in upstream oil prices, the price of PX began to rise in the fourth quarter of 2020, and the price gap with naphtha remained range-bound. In January, due to a series of factory shutdowns, the fundamentals of supply and demand have reversed, and the expected decline in productivity this year has led to a reduction in the supply of futures contracts, which has made supply more tight and the spot supply is limited.

　　 After the Spring Festival holiday ended, after trading resumed, most oil and petrochemical markets showed an upward trend, and the bullish sentiment further intensified.

　　 In the week ending February 20, the U.S. Gulf Coast was hit by a severe winter storm, which caused many refineries and chemical manufacturers to go offline, resulting in tight global PX supply and rising prices. According to sources, the timely US demand for Asian PX has also contributed to market sentiment. A trader said that tighter supplies of PX in the United States may lead to a decrease in supplies in Asia, but due to the flow of goods to the West, arbitrage space should expand.

　　 However, this may further support market sentiment in Asia and the world.

　　 A source said that although the market expects the fundamentals of PX to improve in the first quarter, its performance so far has "exceeded expectations."

　　 After 16 consecutive months of negotiations with no major settlement, PX’s February Asian contract price was unexpectedly settled at US$705/ton.

In the downstream pure terephthalic acid market, the Zhengzhou Commodity Exchange, the most actively traded May contract, rose 234 CNY/ton, or 5.03%, to 4882 CNY/ton on February 25, continuing the week since February 21. Daily increase. The source said that although PX prices and crude oil futures may lead the trend of downstream PTA, the day-to-day jump has accelerated the bullish sentiment of PX market participants and maintained the trading momentum.

　　 Some people worry that the continued increase in PX prices will curb downstream demand in China as the profit rate of PTA production in yuan is squeezed.

　　 Looking ahead, market participants agree that the fundamentals of PX have improved compared with the previous year, and the current bullish sentiment is expected to continue. It is expected that two new PTA devices will be put into production in the first quarter, which will increase the demand for PX in an already tight market.

　　 The source added that the future price trend of PX depends on overall macro factors such as the trend of the relevant market, the recovery speed of supply loss, and the promotion of the new crown vaccine on a global scale.