European Paraxylene Price May Decline Amidst Sufficient Supply in Early Q1 of 2023

Asia: In Early Q1 of 2023, the oversupply of Paraxylene will pose a challenge for European countries as new production facilities are expected to be launched in Asia. As Asia is the major market for Paraxylene, plant startups in the Asian market may ease the supply of material to its exporting nations. However, given the pessimistic outlook for the market, demand is expected to remain low in Europe throughout this week.

In 2023, China will add 6.2 million MT/year of Paraxylene capacity, including; Shenghoug Group, CNOOC Ningbo Daxie Petrochemical, and CNOOC Huizhou Petrochemicals. Additionally, seven Paraxylene factories with a combined annual capacity of 9 million tonnes were announced for construction between 2023 and 2025; three of them would be in China, which includes the above-mentioned industries. Meanwhile, the others would be in Russia, Saudi Arabia, Kuwait, and India. This is likely to increase the supply of Paraxylene from Asian countries as the new facility is expected to meet the required demand.

Meanwhile, Paraxylene prices have been already dropping for the past several weeks in Europe as demand remained sluggish from the end-use Polyethylene Terephthalate (PET) Resin and Polyester market. According to the ChemAnalyst database, the price for Paraxylene in Europe declined by 1%, and the price settled at USD 1162/MT FD Hamburg. However, Paraxylene demand in Europe is anticipated to increase by 7% in 2023 over the previous year. However, its demand growth may be constrained in 2023 by a gloomy macroeconomic outlook as many European countries approach recession amid high inflation and rising interest rates.

According to the traders, the European Paraxylene market's fundamentals are difficult to improve, with supply from the upstream Mixed Xylene market and demand from downstream PET sectors both impacting pricing. Since demand is not healthy from both PET Resin and Polyester markets, the Paraxylene price is expected to remain low in the coming week.

Therefore, the forecast suggests a partial decline in Paraxylene prices in the European market. Also, with the expansion of production capacity in Asia, Europe will face an oversupply of material in the region amidst optimum demand.