Yisheng New Materials earlier planned to shut one 3.6 million mt/yr PTA line in end-Jan for month-long maintenance, but it has been delayed. Yisheng Dalian plans to shut its 3.75 million mt/yr PTA line in end-Feb for maintenance lasting 1 month, and Yisheng Ningbo was going to shut one 2 million mt/yr line in early Mar for upgrading. Adding to that is 3 PTA plants with combined capacity of 8.25 million mt/yr in South China, which have maintenance plans in Mar.
If all the plants are to shut as scheduled, China PTA plant operating rate may decline to a low point of 71~72% with an average level at 80% in Mar, down obviously from the estimated level of 87~88% in Jan.
With PTA companies stepping up maintenance, the oversupply of PX exacerbates, in contrast to the good expectation.
PX is currently under strains from excessive supply and rising inventory. With good economics but turnaround season yet to come, PX plant operating rates in and outside China have been hovering high for more than one month. China PX inventory has been increasing persistently since the fourth quarter of 2023, rising by an estimated 350kt in that quarter. China PX imports are expected to increase sharply in Jan, as the discharging of a large amount of cargoes have been delayed from Dec to Jan, and therefore the inventory could further pile up. It is heard that PX inventory at some PX or PTA plants has risen to high, and the product at some tanks has reached the maximum.
As a result, discussions for PX spot, especially Mar goods, have softened with bigger discount to average price.
However, there's still some good expectation of PX market. Firstly, Asian and US gasoline to crude oil price spread has been widening further in mid-Jan, strengthening the confidence in gasoline blending demand, despite that US gasoline stocks remain high as EIA data show.
Secondly, US toluene and MX prices have been rising obviously, with spread to the prices in Asia widening rapidly. The arbitrage window has opened in mid or late Jan, and it is heard that the flows of MX and toluene cargoes from Asia to US have increased obviously. As gasoline consumption has not yet picked up in the US, while aromatics supply in Asia is ample, market players divert cargoes to US market in the anticipation of fast gasoline consumption growth in the US in later period.
In past two years, during gasoline demand peak in the US, the market saw large amount of toluene and MX cargoes exported from Asia to the US, which led to lower availability of feedstock to PX in Asia and drove up PX prices. PX is expected to still get supported by gasoline demand peak in summer, especially when it can not be proven wrong as the consumption peak has not come.
Thirdly, though PX-naphtha spread maintains high, PX-MX spread has squeezed to $75/mt in Jan, indicating losses for some plants. And therefore, some units based on MX may reduce operating rates.
