Summary of P-Xylene Market in H1, 2017

Introduction: The p-xylene (PX) market performed not bad in H1, 2017. At the beginning of 2017, the PX market price reached $900/mt CFR China. Then, with the declines in crude oil price, the PX market continued being weak for nearly three months. Though the market moved downwards, the profits were satisfactory. Up to June 26, the average profit of PX was $80.34/mt, being equivalent to RMB 600/mt or so.  

Price

The price trend of PX in H1, 2017 can be divided into two stages: First, January to February. As many oil producers agreed to cut oil production, the crude oil price and PTA prices fluctuated higher. The PX market went higher. Second, March to June. Influenced by the supply growth of shale oil, the crude oil output increased and then the price went down. Moreover, the overall operating rate of PTA was low in the Chinese market, which weighed on the unbalance of PX’ supply and demand. The global PX market became soft.

Profits

In H1, 2017, the average profit of Asian PX market was $80.34/mt and the highest profit once hit $123.88/mt. The fluctuation range in Q1, 2017 was $90-110/mt as the naphtha prices slumped and the overall supply increased. Moreover, the profits in the chemical industry was fine. In Q2, 2017, the average profit fluctuated in the range of $50-70/mt. The naphtha price went higher on the positive demand and limited supply, which squeezed the profits of PX to some degree.

Supply and Demand

The import data was updated to May. The total supply of PX was 9,494.2kt (3,976.3kt of output and 5,517.9kt of import), and the demand was 9,403.4kt. In March, the inventory was highest. The PX units in China increased the outputs boosted by policies. Furthermore, considering the maintenance in Q2, 2017, most PTA producers purchased more PX from Japan and South Korea. But, the operating rate of PTA in March was not high.

Forecast

Given the PX market in H1, 2017, PX market will not be positive in the second half of 2017. First, the crude oil price will continue to be low on the increasing crude oil supply. The crude oil price will be hover at $40/barrel. Second, the intensive maintenance has ended in Q2, 2017. The supply will not be tight as that in H1, 2017. So, the PX market will be largely flat in H2, 2017 and it may inch down in Q4, 2017.