Bearish Demand Outlook, Lowers Paraxylene Prices in Asia-Pacific Region

Shanghai, China: The downward momentum in Asian Paraxylene prices appears as producers are lowering the operating rates foreseeing a bearish demand outlook. The recent widening of the prices was largely due to weakness in naphtha value. Meanwhile, lacklustre buying interests in the Asian Paraxylene market started to show more signals of a slowdown in the trade momentum. Thus, as per ChemAnalyst, the price of Paraxylene has dropped marginally in the domestic market.

The fall in Paraxylene prices over the week was due to the feedstock Crude oil, which fell by 5% on Monday, narrowing the gap between Paraxylene and naphtha. Moving in tandem with the falls was China's weaker economic data, forcing China's central bank to cut lending rates to increase demand. Therefore, the squeezing margins were not surprising, given the weaker downstream demand.

Downstream demand remains sluggish and shows no signs of improvement, with most players not confident of the September demand outlook. Downstream Polyethylene Terephthalate (PET), Purified Terephthalic Acid (PTA), and Polyester producers mostly kept low run rates, with Hengli Petrochemical, Oriental Petrochemical at Shanghai, Ineos Group and Yisheng Petrochemical closing their Purified Terephthalic Acid (PTA) units for maintenance in the first week of August.

In contrast, China's Shanghai Petrochemical restarted its 600,000 MT/year Paraxylene unit on 7th august. The Paraxylene plant was shut after a fire broke out at the Mono-Ethylene Glycol unit on 18th June. In addition, a subsidiary of Rongsheng Petrochemical Co. Ltd., Ningbo Zhongjin, has also restarted its 1.6 million MT/year Paraxylene plant in Ningbo from maintenance during the week. Therefore, the return of Shanghai Petrochemical and Ningbo Zhongjin Paraxylene plants is expected to improve supply in the domestic and international markets.

As per the ChemAnalyst database, "Due to the uncertainty about the Crude Oil value, the price for Paraxylene in future is hard to anticipate. However, Analysts suggest price increment due to tight supply fundamentals and strong buying appetite. Meantime, changing crude oil value may also contribute to the changing Paraxylene price. Therefore, the Crude Oil market should be followed regularly."