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PX supply and demand after ZPC cuts production

2021-03-26 08:20:32 CCFGroup

Zhejiang Petroleum and Chemical (ZPC) cut the output of its 4 million mt/year PX unit by 50% on Mar 18 due to the problem of catalyst. The production cut is expected to last for 2-7 days, but has not been finally confirmed.

It reminds us of the situation in Feb, when PX price soared and its spread to naphtha widened rapidly due to some plant hiccups in China and abroad. Zhongjin Petrochemical announced on Jan 28 night that it would extend plant shutdown due to technical issue. Then, PX price advanced sharply by 31%, and PXN spread widened significantly by 68% as of end-Feb. Besides from the production disruptions, the rise in crude oil commodity market was another driving force to robust PX price.

Hence, ZPC’s production cut draws much attention. The accident happened because the catalyst at the isomerization unit of one 2 million mt/yr PX line was deactivated due to leakage of water, therefore, PX production was interrupted. The repair is currently under way and can be completed in 1-2 days, and if the catalyst needs to be replaced, it would take at most 7-10 days. PX production loss is estimated at 10~50kt due to the accident.

Meanwhile, the market is also concerned about downstream PTA plant maintenance. Due to the squeeze in PTA margin, more producers have announced maintenance schedules, and the maintenance centers in Mar-Apr.

Company	Capacity(kta)	T/A plans
Zhongtai Chemical	1200	T/A during Mar 7-mid May
Reignwood	1400	1-month T/A from Mar 6
Hengli 4	2500	2-week T/A from Mar 6
Hengli 1	2200	2-week T/A in Mar-Apr
Hengli 5	2500	2-week T/A in Apr
Ineos	1250	2-week T/A in end Mar
Tongkun	1500	15-20 days T/A in early Apr
Xinfengming	2500	2-week T/A in Apr
Yisheng Ningbo	650	T/A plan
Liwan	700	T/A in May
FCFC Ningbo	1200	2-week T/A in Jun
OPSC	750	1-week T/A in Jun

Based on the estimate of PX production loss and PTA plant maintenance, China PX inventory could increase slightly by 20kt or 50kt at most in Mar.

In Apr, PX inventory is expected to rise by about 80kt, with several PTA plants under shutdown and some PX plants including GS Qingdao Lidong, Sinopec Shanghai and PetroChina Urumqi, going to shut for maintenance.

In a conclusion, PX supply-demand could change, with inventory starting to rebound in Mar-Apr, but the increase is anticipated to be small. Yisheng is slated to start its new PTA plant in May, and then, PX supply and demand could change again. PX-naphtha spread is expected to hover on the range of $230-260/mt, and the price may would track the movements of crude oil and PTA.

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