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Insight | Time: Jan 29 2021 9:26AM
PX supported by supply disruptions
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Several PX plants either cut operating rate or shut down recently, hence the market got bolstered though some of them have restarted.

Recent PX plant operations

PX margins clawed back some losses recently, as a result of production disruption. In addition, the reduction could affect the contract supplies to downstream PTA plant. Hence, the market got propped up and bids for PX were firm.

The improvement in PX margin was also due to expectation of reducing inventory in China in Jan-Feb. It can be seen from the trades of Feb materials concluded earlier that Feb PX price was firmer.

In terms of PTA, it was under immerse strains from increasing inventory, as Fujian Billion had started its new plant, old plant maintenance was limited, while downstream polyester operating rate fell obviously toward the Lunar New Year holiday. As a result, PTA-PX spread has narrowed heavily to lower than 400yuan/mt.

With the margin squeezed, more PTA plants are going to perform maintenance in Mar.

PTA production could reduce by about 700kt in Mar-Apr, if the plants carry out the maintenance as scheduled, equivalent to a loss of 460kt demand for PX. However, the implementation of PTA plant maintenance will still be dependent on the margins. When PTA margins drop below 400yuan/mt, more producers would mull over production cuts.

On supply front, Sinopec Shanghai and GS Qingdao Lidong have maintenance plans for their PX plants in Mar-Apr, while maintenance of other plants are expected to start from May.

On Jan 28 evening, Zhongjin Petrochemical failed in restarting its 1.6 million mt/yr PX plant due to a glitch, and the shutdown would extend for 1 month. The news soon came under spotlight amid concerns about further reduction in PX supply, and therefore PX market could get bolstered.
[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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