Crude oil nosedived last week, amid expectation of interest rate hike and the fallout of bank failure. During Mar 6-17, WTI and Brent crude futures plunged by 17% and 15% respectively. Meanwhile, the drop in PTA price was rather small compared to crude oil. May contract of PTA futures declined by 6.8% from the high point on Mar 8 to the low point on Mar 16, and it only lost 2.2% during Mar 8-17. PTA spot price shed by 4.7% during Mar 8-16 and lost 2.5% as of Mar 17. The spread of PTA spot to futures widened heavily from 65yuan/mt on Mar 8 to 145yuan/mt on Mar 17. PTA with its strength came under the spotlight.
However, PTA processing spread got squeezed over the same period. It widened to 450yuan/mt on Mar 8 and further to 467yuan/mt on Mar 10. But the processing spread based on May PTA futures and PX paper goods has narrowed to 290yuan/mt as of Mar 17, down by 38% from the high point, indicating negative profits from most plants.
PX seems to have kept a low profile, with price strengthening and profits widening.
During Mar 6-17, PX price advanced 1%, and its spread to naphtha widened by 39% to above $400/mt, hitting new high since Oct 10 2022.
The divergence in PTA and PX can be reflected by plant operating rates.
In mid and late Feb, the operating rates of polyester plants, as well as downstream DTY units and weavers recovered to the high points. Meanwhile, PTA plant operating rate fluctuated downward, leading to PTA processing spread widening since mid-Feb amid improvement in fundamentals. In the beginning of Mar, with better economics, PTA producers were motivated to raise plant operating rates and the average level hiked rapidly from 70% to 80%.
As for PX, the traditional turnaround season began in Mar, with several plants in and outside China starting maintenance. With further maintenance schedules, PX plant operating rate is expected to further move down.
| Company |
Location |
Capacity (kt/yr) |
Turnaround |
| Sinopec Jinling |
Jiangsu |
700 |
End-Mar to early May, O/R cut |
| CNOOC Huizhou |
Guangdong |
950 |
Mar 15, 50 days |
| Sinopec Luoyang |
Henan |
230 |
Delayed to mid-May |
| CNPC Liaoyang |
Liaoning |
700 |
Early Apr, 1 and a half months |
| CNPC Urumqi |
Xinjiang |
1000 |
Mid-Apr to late Jun |
| Weilian Chemical |
Shandong |
2000 |
Apr-May, 2 months |
| Fuhaichuang |
Fujian |
1600 |
Q2, 1 and a half months |
| ZPC |
Zhejiang |
4000 |
Q2 |
| GS |
South Korea |
400 |
Mar 18 to late Apr |
| GS 3# |
South Korea |
550 |
Mar 8 to early May |
| NSRP |
Vietnam |
700 |
Shut in end-Feb and restarted in late Mar; t/a delayed from Mar to Aug |
| Hengyi Brunei |
Brunei |
1500 |
Mar 12, 45 days |
| TPPI |
Indonesia |
550 |
Feb 23 to end-Mar |
Based on the turnaround scheduled, China and Asian PX plant operating rates could further drop and reach low points of 70% and 68% respectively in mid-Apr. Afterwards, it is expected to increase gradually. China PX inventory is expected to reduce in Apr and May, unless any massive PTA plant shutdowns happen.
Under this circumstance, and with some PTA producers entering to buy, PX price rises and thus PTA processing spread is squeezed.
