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Insight | Time: Apr 17 2023 9:41AM  Editor:Louis
PX hikes on the expectation of gasoline blending demand
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PX price rallied again last week amid brisk trading. On Apr 14, a deal of Asia-origin May goods was concluded at $1165/mt and two deals of Asia-origin Jun goods done at $1147/mt CFR. PX price hiked to $1152/mt CFR on Apr 13, new high since Jul 8 2022, and was little changed on Apr 14.


In terms of feedstock, crude oil and naphtha fluctuated upward this week, supportive to PX price. Downstream PTA futures consolidated at highs with advancing momentum weakening, while polyester plant operating rate dropped.


In terms of plant operations, Weilian Chemical鈥檚 1 million mt/yr PX line, CNPC Urumqi鈥檚 1 million mt/yr plant and Taiwan FCFC鈥檚 one 950kt/yr plant were shut earlier as scheduled for turnarounds. In mid-week, it was said that there were some troubles in Fujia Dahua鈥檚 2.6 million mt/yr reformer. Afterwards, the troubles were solved and its PX plant operation was not affected.


There was not much advancing momentum from PX fundamentals, while the main support came from expectations for gasoline blending.


On Apr 11, South Korea announced the export data during Apr 1-10, during which it exported about 103.8kt of PX, new low compared to the same periods of past months this year. About 29kt of PX exports went to the US. Therefore, participants were concerned about tight PX supply in Asia.


Beginning from Apr, participants have become more focused on gasoline blending demand. There were rumors that South Korea exported more than 100kt of aromatics product including benzene, toluene, MX and PX; a deal of PX bound for South America was concluded; and some participants were purchasing CFR Vietnam PX for gasoline blending. Therefore, PX price was driven up. However, as gasoline blending demand spiked in 2022, some traders had reached deals in advance with US buyers to supply aromatics to the US on FOB basis. The chat below showed that aromatics exports from South Korea averaged 130kt a month in the first quarter of 2023, and recorded as high as 180kt in Feb. Therefore, the export volume of 100kt was in the acceptable range.


Given the prices in the US, the arbitrage for toluene from Asia to US was open with price spread at around $220/mt. US-Asia PX price spread was relative narrow at $60/mt, while the freight from Asia to the US was currently at around $120/mt or above.


In addition, with the approaching of port declaration for May cargoes on Apr 14, buying in May goods was active. Bid for May goods was on the high side and May/Jun spread widened.


In a conclusion, PX plant operating rate was low and supply was slightly tight amid intensive turnarounds. Expectation of gasoline blending demand was good and prices of May goods strengthened due to port declaration. Gasoline blending prospect would remain a focus, though the demand may not be so strong as that in 2022.

[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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