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Insight | Time: Feb 28 2019 9:51AM
MX gets supported by expectation of new PX plants
 
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Some new large PX plants are slated to start in 2019, and thus market participants are optimistic on the growth of demand for MX. However, China’s MX market has not yet hiked obviously, with price only bouncing from 5,000yuan/mt back to 5,500yuan/mt and then maintaining fluctuation. Then, can we expect a stronger MX market in 2019?

MX market in South China, for example, has seen the price increasing to above that in East China due to the restart of Fuhaichuang’s PX plant as well as the expectation of new PX plants.



Currently, PX-MX spread is very large, more than $400/mt. The spread is even bigger, if calculated in Chinese yuan. For example, Sinopec’s PX settlement is 8730yuan/mt for Feb, and MX price is now at around 5500yuan/mt, which means that the spread is as high as 3230yuan/mt.



In addition, it is heard that some PX producers has bought MX for plant trial run or later operation. Port inventory of MX in Jiangsu has increased to historical high, but it is not only because of PX producers’ building up stocks.

At present, domestic yuan MX is cheaper than USD supply, but there’s still requirements for imports. The imports totaled 550kt in 2018, and the growth is expected to slow down in 2019.

Though there’s uncertainty in the timing of new PX plants, it is for sure that there will be requirements for merchant MX supply. If new PX capacity is based entirely on merchant MX, a new plant with PX capacity at 1 million mt/yr could need to buy 80-90kt of MX per month, and a new plant with PX capacity at 2.25 million mt/yr could mean an additional demand for MX of 190-220kt per month. Buying MX to produce PX depends on the capital condition and production schedule of PX producers.
[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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