How will the global mixed xylene market evolve in the second half of the year?

Market analysts said that entering the second half of the year, the global mixed xylene (MX) market supply and demand situation will tend to balance. Affected by the resumption of production after the shutdown of MX devices in Japan and the shutdown of some major end users, the shortage of supply in the Asian MX market will be effectively alleviated; the increase in the operating rate of PX devices and the increase in driving activities will alleviate the oversupply of the MX market in Europe Status: Rising refinery operating rates and the sharp rise in benzene prices will prompt the supply of MX in the United States to become more abundant.

Asia

Supply shortage will ease

With the resumption of production of Japanese MX devices after shutdown for maintenance, the supply shortage in the Asian heterogeneous MX market in the second quarter may be eased.

In addition, major MX end users in Asia such as Taiwan’s Taiwan Chemical Fiber Company (FCFC) and South Korea’s Lotte Chemical Company plan to close the aromatics plant (which produces PX, benzene, and o-xylene) for maintenance shutdowns, which will reduce the cost of heterogeneous MX demand. Standard & Poor’s Global Platts Energy Information reported that FCFC plans to close its No. 2 aromatics plant in Mailiao in July for about 45 days of shutdown for maintenance, while its largest No. 3 aromatics plant will be closed for 20 to 30 days in October. . Lotte Chemical of South Korea plans to close its two aromatics plants in Ulsan from October to November for about 35 days of shutdown for maintenance.

At the same time, downstream PX will be affected by the start of the second phase of China's Zhejiang Petrochemical Company. Starting from June, it will increase its PX production capacity by about 2.5 million tons/year, and will increase its PX production capacity by another 2.5 million tons/year in the third quarter. Market sources said in May this year that such a large-scale increase in PX production capacity may put pressure on the PX market and affect the price and production margins of heterogeneous MX.

A Northeast Asian PX manufacturer is concerned about the increase in PX supply, which may lead to a decline in the operating rate of its PX plant, thereby reducing MX demand. But a source from a Chinese PX producer said: “The newly-built purified terephthalic acid (PTA) capacity is also huge. If global demand improves in the second half of this year, the increase in supply may not be a big problem.”

At the same time, affected by the epidemic, Indian demand is still very uncertain in the second half of the year. Compared with heterogeneous MX, Indian demand prefers solvent-grade MX.

Europe

Oversupply situation will be reversed

The growth of demand in the European MX market in the second half of the year will depend on the increase in the operating rate of PX devices and the increase in driving activities. The increase in driving activities may stimulate the demand for MX as a gasoline blending component.

Since the beginning of this year, due to the unplanned shutdown of the PX plant, the demand for MX as a chemical raw material has been suppressed, and the competitiveness of MX as a gasoline blending component is far inferior to reformed gasoline or methyl tert-butyl ether (MTBE) as a gasoline blender Component. As a result, MX spot market activity in Europe has weakened, and manufacturers have also restricted supply.

An MX seller in Europe said: “Currently, many PTA devices in Europe are under maintenance and repairs are expected to end soon. If PTA devices resume production, the oversupply of MX in Europe will be reversed.” A trader added that 7 -September polyethylene terephthalate (PET) production will increase, which will make the demand for PTA peak.

United States

Supply will tend to be abundant

Although the Texas winter storm in mid-February and subsequent power outages resulted in planned shutdowns for overhauls and the closure of reformers, limiting the output of MX producers. However, in the second half of this year, the supply of MX along the US Gulf Coast will still tend to be abundant.

U.S. refinery operating rates fell sharply during the winter storm in February this year, but rose to 86.5% in May, slightly lower than the level before the COVID-19 pandemic. According to the forecast of S&P Global Platts, by midsummer, the operating rate of US refineries may be close to 95%.

In addition, demand growth and supply tightening have led to a bullish trend in the U.S. benzene market in 2021. The sharp rise in the price of spot benzene has greatly improved the economics of toluene disproportionation, and the supply of MX as a by-product of toluene disproportionation will also increase.

At the same time, downstream PX producers' demand for MX will depend to a certain extent on the recovery of American acetic acid supply. Previously, the supply of acetic acid in the United States was reduced due to a winter storm in Texas. A market participant said: “Due to the unstable supply of acetic acid, the start of the PET/PTA industry chain is limited, which in turn affects the demand for PX and the operating rate of the device.”

The continuous increase in global PX production capacity has put pressure on PX prices and production profits. In the first quarter of 2021, the PX imported by the United States from the Middle East and other regions will be the same as in the second half of 2020. As long as the import price of PX from the U.S. Atlantic coast is still lower than the price for purchasing, transporting and processing PX produced by the U.S. Gulf Coast MX, the demand for the U.S. Gulf Coast raw material MX will continue to be restricted.