Paraxylene prices in Asia hit a 21-month high due to tight supply

PX prices in Asia hit a 21-month high, reported at US$895.83/ton CFR China, due to supply shortages caused by failures in many factories since the beginning of the year.

Data show 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 raw naphtha, 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 decrease in the supply of futures contracts, which has made supplies more tight and the spot supply is limited.

After the Chinese New Year holiday ended and trading resumed, most oil and petrochemical markets showed an upward trend, and bullish sentiment further intensified.

As of one week, the U.S. Gulf Coast suffered 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 even the world. A source said that although the market expects PX's fundamentals to improve in the first quarter, its performance so far "exceeds 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 daytime 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 when PTA production margins calculated in yuan are being 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 PX price trend depends on overall macro factors such as the trend of the relevant market, the recovery speed of the supply loss, and the promotion of the new crown vaccine on a global scale.