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Insight | Time: Feb 27 2019 10:57AM
PX supply-demand forecast
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PX currently remains the most profitable product in polyester chain (except for some differential polyester products), as well as in aromatics chain. How long could the situation last, and when will there be an inflection point for supply and demand? Let’s take a look at the growth of demand for PX.

As of the week ending Feb 22, the average operating rate of polyester plants had increased to 85.4%. However, it was still lower than the level seen before the Spring Festival, not to mention the previous high recorded in the second half of 2018. Demand from polyester has not yet recovered.

The inventory of polyester filament yarn has increased to its high level, and the profit of PFY was at regular level.

According to CCFGroup’s forecast, there’s a possibility that polyester operating rate rises to above 90%, which means that there will be an increase of 10% in the first quarter. Given that the operating rate maintains above 90% from Apr to Jun, the growth will be merely at 4.5% in the second quarter. Under this circumstance, PX supply and demand could be balanced.

China’s PX imports are expected to reach 1.4 million tons per month in the first half of 2019, compared with 1.32 million tons in the same period of 2018. However, it is more difficult to forecast domestic PX output. New PX capacity is unlikely to start until May, and there would not be much selling pressure in May. However, Jun will be tough for PX sellers, when the inventory may pile up.

PX operating rate is expected to tick up in May.

If recovery of polyester operating rate is slower than expected, pressure onto PX will manifest earlier; and if fresh PX capacity starts faster than expected, the profits could get squeezed. And if polyester recovers faster or new PX plants come later than expected, the outcome will be opposite. Currently, the changing direction of PX supply and demand is not clearly defined.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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