PX margins improves on PTA capacity expansion and PX supply disruption – ChinaTexnet.com
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PX margins improves on PTA capacity expansion and PX supply disruption

2021-04-19 08:14:06 CCFGroup

PX price hiked this week, driven by the rise in crude oil and downstream PTA. As of Apr 15, PX price advanced 6.6% over the week, compared to gains of 5.8% in crude oil, 3.5% in naphtha and 4.2% in PTA spots. PX-naphtha spread widened to $279/mt while PTA spot to PX spread narrowed by 17.5% to below 280yuan/mt over the week.


PX and PTA margins diverge, as the capacity expansion does not coincide.

Since the fourth quarter of 2020, PTA capacity expansion has outpaced that of PX, which has also led to continuous PX inventory reduction from Nov 2020 to Mar 2021.



More specifically, PX market is supported by planned and unplanned plant shutdowns and operating rate cuts throughout the first quarter of 2021.



As of mid-Apr, the unplanned plant disruptions have led to production loss of nearly 600kt.

The pressure of high PX stockpiles stacked in 2020, has been relieved to a large extent, due to slower expansion than PTA and PX production loss caused by plant hiccups.

In addition, Yisheng New Material is slated to start its new 3.5 million mt/yr PTA line in Apr-May, and Zhejiang Petrochemical is poised to start new 2.5 million mt/yr PX line one month later in May-Jun. Before the startup of the PTA plant, there’s requirement to stock up feedstock PX.

Another reason for the widening PX-naphtha spread is weak naphtha price lately. With LPG price dropping, some crackers are purchasing LPG in substitution to naphtha. In addition, some crackers have maintenance plans. As a result, brent crude to naphtha spread has narrowed notably, and the profit in the industry chain is shifting from naphtha to PX.

Currently, PX inventory pressure is alleviated, upcoming PX and PTA capacity expansion will coincide, and thus PX-naphtha spread could get supported.

In the medium term, the focus should be laid on whether PTA plants would cut production due to the squeeze of margins. Meanwhile, Fuhaichuang is poised to restart the other 800kt/yr PX plant in the end of Apr. However, PX-naphtha spread is unlikely to narrow substantially in the backdrop if good profits in refining and polyester products, and PTA capacity expands faster than that of PX.

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