Behind the Price Jump and Slump of PX ?
Author: Oct 25, 2011 16:31
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168tex News: Recently, PX has showed a big price fluctuation, with a big price slump. In just three days, Asian PX price has fallen by $137 to $1462/t, FOB Korea. The drawdown is 8.57%. And its price in the European market also dropped by $116 to $1405/t, FOB Rotterdam, with a drawdown of 7.63%.
 PX market is not smoothly, with many big ups and downs. First, let’s take a review on its ups and downs events.
11th March, a tsunami was triggered by a 9.0 grade earthquake in the northeast sea area of Japan. For the big earthquake, PX devices were forced to shut down, nearly a million of production was reduced and leading to a short supply and which contributes a big shock to the Asian PX supply. Its price was also jumped after the big earthquake, driving Asian PX price to a new peak in the history. But its price has not risen by big as it was expected, instead, the price keeps a consolidation after a straight line fall.
Since July, China PX devices have encountered with many problems. In the mid-term of July, a fire was happened in Cnooc huizhou refinery, leading to the device stop, with the production of 840 thousand tons. On 30th July, in the morning, a fire broke out in Formosa petrochemical group yunlin mailiao 6th branch, which is just four days before the last fire, and it is also the seventh safety accident of Formosa over the year. The plant owns a production of 270 thousand tons. On 3rd Aug, a typhoon called Winter Sweet hit Dalian, Fujia Dahua Dam was break. On the afternoon of 14th Aug, Fujia Dahua PX project was officially announced to stop production by Dalian Municipal government, and officially decided to move the project out. According to the survey, the yearly output of Fujia Dahua PX project is around 700 thousand ton, which is the biggest monomer aromatic petrochemical project, taking up 8.4% of PX production in China mainland. The frequent production stop for checking and repairing work, and the accident production stop have led to a notable supply shortage, thus boosting PX price at a high level. The price increase has lasted for nearly two months.
Of course, there is also some hype factors, but see from which, we will find that PX supply is still in short at the moment.
Besides the influence of production stop in China, during Sept to Oct, there will be also some other device stop for checking and repairing work in other countries of Asia, including Thailand, Japan, Korea and etc. In addition, according to the notice about the environmental work of strengthening PX and other sensitive product, issued by the national development and reform commission, requiring a major inspection on dangerous chemical products, and lifting up the admittance threshold of the industry. The policy has played an important role on the PX industry and may probably cause a curb to the expansion of PX production in China.
Currently, the global PX is mainly absorbed by PTA field. PX device stop will enlarge the domestic PX supply shortage, but when PX feedstock supply is reduced, PTA production is expanded. With PTA production accelerated, the admittance threshold lifting up may put PX new project into difficulty. Thus PX production may lags behind PTA expansion speed. As the data indicates, in 2010, PX production was around 9060 thousand ton, while the downstream PTA production is around 19.96 million ton. On the basis of 0.655 ton PX for a ton of PTA, and 80% operation rate, then PX shortage gap will be over 1 million. Since July 2011, there is 3.7 million ton of new PTA put into production, while the overall yearly PX production is just 1.8 million ton.
Besides, PTA production will continue to intensively released next year, and it is the total production of 2012 is planned to be over 10 million ton. Therefore, it is estimated that during a short term, PX supply gap will be further enlarged. The market worries of its shortage still exist, and see from which, PX price is probably to fluctuate at a high level.
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Editor: Candy From: 168Tex.com
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