PX tracks the rise in PTA after the landfall of typhoon

PTA futures on Zhengzhou Commodity Exchange surged on Jul 28 afternoon, with Sep contract advancing 3.01% on that day.

The surge in PTA futures on Jul 28 drew much attention. Some attributed it to macro economic resilience; some said that due to the typhoon, discharging of feedstock at the ports was interrupted and thus PTA futures price hiked sharply; and some mentioned that Ministry of Industry and Information Technology and other two departments jointly issued Working Plan for Light Industry Growth (2023-2024).

Those factors lent support to PTA futures. Commodity market rebounded and stock market soared on Jul 28 afternoon, and PTA futures advanced in tandem. Meanwhile, Typhoon Doksuri made landfall in South China's Fujian Province on Jul 29, and had brought heavy rains. As a result, logistics at the ports could be impacted.

In Sep 2022, two typhoons landed continuously in China, and under the impact, some PTA plant in East China had to cut production due to disruption of feedstock. Whether the situation could repeat in 2023 raised much concern, especially when China PX supply remains relatively tight.

According to the market feedback, the Typhoon Doksuri is so strong that it has brought some impact on PX logistics. Some companies in South China have suspended ship transportation since Jul 25 or 26. In East China, some companies also halted marine transportation on Jul 28, and traffic at Yangtze River was halted on Jul 28. Therefore, in terms of logistics, the typhoon has indeed dealt a blow to the transportation at East and South China.

PTA plant operating rate is currently stable, though PX supply remains tight and feedstock PX at PTA plants is quite low. As the impact from typhoon on logistics would only last for 3 days in maximum, most PTA plants are unlikely to cut operating rate due to feedstock supply disruption. However, if the impact extends for some more days, some PTA plants may lower operating rate slightly in response to the supply availability.

Considering that demand for toluene and MX as gasoline blending components remains strong, and PX plant operating rate outside China keeps low, China PX supply may remain tight as long as PTA plant operating rate sustains. Therefore, after PTA futures surged on Jul 28 afternoon, PX price strengthened and hiked sharply in tandem.

Looking forward, the next typhoon, Khanun has formed, which may approach East China and its path should be noted. If it impacts East China, any fluctuation in PTA plant operating rates should be watched closely.

In a conclusion, with limited PTA plant maintenance plan, PX supply and demand are largely balanced, and the increase in PX inventory comes later than expected.