Introduction: The PX market has risen sharply since June. Due to the fierce increase, it has become a star product among chemicals. On June 1, the price of CFR China PX was US$1,291/ton. As of June 9, the price of CFR China PX has reached US$1,291/ton. It rose to US$1,513/ton. In just a few days, the market rose by a total of US$222/ton, an increase of 17.2%. The fierceness of the market was breathtaking. However, in the past two days, the PX market has experienced a trend of rising and falling, and the decline has been relatively large. So, is the market experiencing a temporary correction or continuing to weaken?
Data source: Jin Lianchuang
Let’s first review the reasons why this market broke out:
1. The demand for oil blending in the United States is strong. The peak travel season in the northern hemisphere in summer has increased the demand for gasoline. Therefore, the aromatic hydrocarbons required for gasoline blending are stronger in summer. In addition, European and American sanctions on Russia have led to changes in the global trade flow of oil products. U.S. gasoline exports have increased, so the demand for blended oil has also increased significantly. Some local refineries have closed their aromatics units, resulting in toluene, xylene, PX and other aromatics. The supply of similar products is tight, and the price of PX in the United States is 400-500 US dollars/ton higher than the price in Asia. This leads to the tendency of Asian PX to be exported to the United States for arbitrage, and the supply and demand pattern in the Asian market is broken.
2. The Asian market is tense. Due to the large losses in PX production in the early stage, the operating rate of Japanese and Korean PX companies is not high. Therefore, after some cargoes are exported to the United States, the Asian market is even more tense. Although some traders regard this rise as an opportunity. Hype, but a careful analysis shows that although China’s PX construction continues to increase and the supply is relatively sufficient, because China has no export volume, and Asian PX sellers are basically in Japan, South Korea, India, Southeast Asia and other places, the pricing power is basically in the Asian market, slightly Tight supply can lead to tight prices in the market. As long as there are buyers to take over, it is relatively easy to follow the trend.
3. PTA is linked to the strength of PX. If the price of PX alone increases and the downstream PTA does not follow the increase, it will be difficult for PX to continue to exert force. There are many PTA maintenance devices in China, and the overall start-up in June is basically around 70%, which is higher than last year. The level during the same period was 6.8% lower. The supply of PTA is also in a tight state, so with the downstream linkage of PX rising, PX continues to push up.
Regarding the market outlook, industry players have different opinions. High oil prices still support market sentiment. The tight supply of PX in the United States will not be alleviated in the short term. However, domestic PX maintenance equipment has basically returned to normal. A 1 million tons/year PX equipment in Hainan Refining plans to restart in mid-June. , the overall operating rate in the country is currently around 85%, which is at a relatively high level. Although domestic PX cannot be supplied to the Asian market, with sufficient supply, imports may continue to decrease. The tight supply in the United States has already pushed the price of PX to high levels. The local demand for PX in the United States is not large, and this news is difficult to continue to push up the market. In addition, the rapid decline in the market means that profit orders are pouring out. PX profits have increased to high profit levels, and supply will inevitably rebound in the future.
It is expected that the Asian PX market will gradually return to rationality, and a slow decline is more likely.
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