China's PX imports in Jan-Feb

Chinese mainland received 867kt of PX imports in Jan 2024, up 20.88% year-on-year, and imported 800kt in Feb, down 2.3% year-on-year, customs data showed. The increasing imports added to the supply length of PX in China.

Northeast Asia remained the largest supplier, accounting for 80.9% of China total PX imports in Jan and 72.9% in Feb. The imports from Northeast Asia increased by 211kt in Jan-Feb, compared to Nov-Dec last year. Since the end of gasoline blending season last year, PX plants in South Korea had maintained high operating rates till the end of Feb this year, however, as local consumption was subdued by weak demand, the country had to increase its PX exports to China. As a result, South Korea's PX net export volume to Chinese mainland rose by 95kt in Jan-Feb, compared to Nov-Dec last year.

In Southeast Asia, India's PX exported to China kept decreasing to a full-year volume of merely 18kt in 2023. Though the volume has reached 21kt in Jan 2024, it is unlikely to sustain throughout the year. As for Brunei, its PX exports to China reduced obviously in Jan, due to reduced production caused by temporary plant maintenance.

In Middle East, due to intensive refinery maintenance in Jan and Feb, PX production got affected and the exports were slashed. Afterwards, with plants restarting, exports to China are expected to recover.

The imports increased in Jan 2024 compared to the same period of last year, but reduced slightly in Feb year-on-year. Then, does it mean that the reduced imports could alleviate lengthy supply?

As a matter of fact, the reduction in Feb was attributed to delay of shipments. Firstly, PX stocks at domestic PTA plants were high, and some tanks were even reaching maximum storage capacity. As a result, the arriving of some PX cargoes got postponed. Secondly, the logistics were affected by bad weather conditions in Feb. Therefore, some cargoes could be delayed to Mar, and any import reduction in Mar could be limited despite some plant maintenance outside China such as GS.

In a conclusion, long PX supply continues due to high plant operating rate since the fourth quarter of 2023. Adding to the supply glut is the increasing imports. Though the operating rates of some PX plants in South Korea and Japan fall back due to turnarounds coupled with pickup in gasoline blending demand, any support to PX market which is under long supply is limited.