PX price driven up by active buying

CFR China PX price spiked on Aug 10, up $22/mt from Aug 8. During the same period, Brent crude oil futures advanced $2.6/bbl, equivalent to $20/mt; and naphtha price gained $16/mt. The rise in PX price was largely consistent with that in feedstock.

However, compared to relatively weak PTA futures, PX remained strong. Trading in PX spot market was active with 6 deals concluded on Aug 10. South Korea's GS bought 2 deals of Asia-origin Oct goods at $1080/mt CFR. Japan's Mitsui and Mitsubishi were active, each buying 2 deals of Asia-origin Sep goods, at $1090/mt, $1090/mt, $1091/mt and $1092/mt CFR respectively.

Behind the active buying from Japan's traders, the reason may lie in future maintenance plans of PX plants in Japan. Plant maintenance may lead to reduction of local supply, and suppliers need to purchase from spot market to ensure the fulfillment of contracts.

Japanese company occupies some shares of NSRP refinery in Vietnam, and thus the maintenance would also affect PX supply of the relevant company.

Apart from ENEOS' 190kt/yr PX plant, whose restart got postponed unexpectedly, other plants would undergo scheduled maintenance. Typically, if companies need to make up for the supply loss brought by plant maintenance, they would restock in advance. It can be seen from the pace of buying activities that companies purchased intensively in Aug, with the port and laycan declarations for Sep-delivery PX cargoes due to be concluded in two weeks. And trading volume has increased obviously this week. In fact, companies indeed usually purchase when it is approaching the declarations, and reduce the purchasing volume after the declaration (15th of every month). It needs to be seen whether the buying pace will remain unchanged.