Introduction: In the first half of 2022, the Asian PX market will fluctuate and rise. Taking the CFR Chinese market as an example, the average price in the first half of 2022 was US$1,170.8/ton, a year-on-year increase of 44.12%. The highest price was US$1,513/ton, which appeared in June, and the lowest price was US$899/ton, which appeared in January.
Data source: Jin Lianchuang
In the first half of the year, the Asian PX market staged a bull market. Although there were two rapid rises and then fell back, the overall performance was strong. International crude oil has steadily strengthened at the beginning of the year. Under the warmer environment, PX costs have been well supported. However, during the maintenance of some PX units of domestic Fuhaichuang, Dalian Fujia, Fujian United, Sinochem Quanzhou, and Zhejiang Petrochemical, the PX industry has started to operate at a low level and the overall supply volume has been low. The market continues to be tight, and merchants have a strong intention to raise prices.
After the Spring Festival, commodities generally opened higher, and the downstream PTA market made up for the increase, which once again boosted market sentiment. At the end of February, the border conflict between Russia and Ukraine escalated, and the Russian army launched multiple military strikes on Ukraine. International crude oil hit a new high, with WTI rising to a maximum of 130.5. USD/barrel, although PX supply is basically normal and downstream PTA production is losing money, it still continues to rise following the raw material market. After the high price, the downstream follow-up slowed down, especially as the domestic epidemic affected terminal demand and the confidence of cargo holders loosened, and the market began to fall rapidly in late April.
In mid-May, due to the good demand for gasoline, some refineries in the United States shut down toluene disproportionation units in order to increase gasoline production. In addition, PX factories in Northeast Asia did not start at a high rate, and some cargoes were arbitraged to the United States. PX cargoes were tight and prices rose, and PX supply continued to be tight. Down, the market surged higher again.
Starting from early June, international crude oil began to fall sharply, and a large number of profit-making orders poured out. In addition, downstream PTA continued to fall, and the intention to take orders was dull. The mentality of the industry returned to rationality, and the market fell rapidly.
Forecast for the second half of the year
In the Chinese PX market in the second half of 2022, the supply and demand side will be the main influencing factor of price fluctuations. In the second half of the year, there are still three sets of PX devices planned to be put into operation in China. The new PX production capacity totals 6.5 million tons, accounting for 20% of the total domestic production capacity. As PX profits have returned to high levels, companies will maintain high-load production, so supply continues to increase. In terms of downstream demand, new PTA devices are planned to be put into operation in the second half of the year with a production capacity of approximately 12.5 million tons. However, due to the oversupply of the PTA industry, there is a risk of delays in the start-up of new devices. Companies may start operations or maintain low-load conditions, so the incremental demand for PX is limited.
Taken together, the supply and demand side of PX will continue to maintain a balance in the second half of the year, and import volume will slowly decrease. Considering the weak performance of the terminal apparel industry, it is difficult to maintain high PX prices, and the market may stabilize and then slowly decline.
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