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Insight | Time: May 8 2019 11:03AM
PX-naphtha spread unlikely to repeat 2014's low
 
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PX-naphtha spread plummeted from its 5-year high to previous average level over the past month. The reason behind it was that new capacity led to expectation of supply glut, though only Hengli Petrochemical has started one PX unit with capacity at 2.25 million mt/yr. On the other hand, additional demand from PTA does not increase without capacity expansion in near term. Therefore, it is inevitable that PX market suffers setbacks, and there is more fresh capacity slated to come on line in the second half year.



In terms of demand, downstream PTA is unlikely to weigh on PX, and thus PX-naphtha spread is unlikely to repeat the bottom recorded in 2014. PTA profit has improved after PX price drops, but is still subdued by plans of new capacity including Sichuan Energy Investment’s PTA project and Dushan Energy’s PTA project. Another restraint to PTA is polyester profit which is quite low. Therefore, PTA-PX spread could rebound to 2000yuan/mt, but it is unlikely to retouch the historical high in 2010-2011.


[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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