PX futures surge

Commodity futures prices surged on Nov 6 afternoon. And PX futures advanced the most, with Jan contract price soaring 3%, exceeding the gains in PTA futures.

1. Bullish commodity futures market

Recently, the commodity market has been quite bullish. Not only the chemical sector, but also non-ferrous metals, coal, and other sectors saw significant gains on Nov 6. This has also been driven by the improved macroeconomic sentiment following the conclusion of the China-U.S. meeting. The confidence of investors has strengthened.

2. Upbeat stock market

Similarly, the polyester sector stocks were upbeat on Nov 6. Around midday, stocks of several polyester companies rose successively, with some even hitting the daily limit up. Subsequently, driven by the rise in polyester company stocks, futures prices in the polyester sector also gradually increased, with circulating market commentary about PTA.

3. Market commentary about PTA

The market is still focused on PTA industry meeting. The meeting in Oct did not yield any effective measures, and PTA plants have not implemented further production cuts.

The PTA reduction and shutdown plans circulating in the market on Nov 6 are all part of scheduled maintenance. XinFengMing and INEOS are undergoing maintenance as scheduled.

Furthermore, regarding market rumors of coordination in the PTA market, current news suggests that it remains difficult for companies to reach a consensus. From the end of October to now, progress has been limited.

4. PX supply and demand

Toward the end of the year, the market is focused on the outlook regarding PX/PTA, including the entire polyester industry chain. Several rumors about large PX plant maintenance have been circulating in the market in recent days. For instance, maintenance rumors have also emerged concerning major PX producers like Shenghong, and those unit shutdowns would concentrated in the first half of next year.

It is rumored in the market that ZPC is going to shut reformer for maintenance in the first quarter of 2026, and it would purchase MX for PX production until PX unit maintenance in Mar-Apr.

As for PX supply and demand, the addition of 8.7 million tons of new PTA capacity this year brings positive effect on PX demand, despite some long-term shutdowns of PTA facilities like Yisheng. This has led to continuous PX inventory reduction in 2025, with both PX and PTA plant inventories staying at relatively low levels.

Overseas suppliers, aiming to lock in profits, sold their cargoes early, therefore, there's little relief in spot PX market liquidity, keeping floating prices persistently strong. Even for PX goods for December delivery, a traditional off-seas for polyester, PX price is at $7/mt premium to formula pricing, reflecting tight supply of PX.

Following the significant PX inventory drop in 2025, the destocking trend is expected to extend into 2026.

While PTA capacity expansion pauses in 2026, new PX units such as Huajin Aramco will come online. The mismatch in the timing of PX and PTA capacity expansions will keep the PX market tight in the first half of next year.

New PX plants of Huajin Aramco and Yulong Petrochmeical, and even the second phase of Sinopec Jiujiang Petrochemical will not come on line until the third quarter of 2026 or 2027. This means that overall PX supply will remain at current levels until Q3 next year, with only limited increments from short-process units and some capacity expansion.

If the recently rumored plant maintenance materializes, PX supply could tighten significantly in H1 2026. On the demand side, polyester output continues to grow, driving steady increases in PTA demand. Even without new PTA plants, production will keep rising, ultimately translating into stronger PX consumption.

Therefore, from a supply-demand perspective, PX is likely to maintain strong in H1 2026. This fundamental strength may partly explain why PX outperformed on Nov 6.

However, it's also important to note that the recent sustained strength in PX is largely driven by improved market sentiment and solid fundamentals. From a cyclical standpoint, while PTA operations have been resilient despite losses, supported by polyester demand, polyester industry is now entering its seasonal lull. Upstream segments may grow more sensitive to demand-side signals moving forward, making it crucial to monitor polyester market trends closely.