Weak Downstream Demand to Pull Back Paraxylene Market Value

Shanghai, China: Paraxylene prices dipped and stabilized in the Asian market, weighed by the sharp losses in the downstream Purified Terephthalic Acid (PTA) market. Several sources mentioned that demand fundamentals have primarily driven the recent Paraxylene market; and attributed the day-on-day losses in downstream PTA offtakes. Operating rates for downstream polyesters recovered slightly, with major Polyethylene Terephthalate (PET) suppliers resuming production gradually after three months of production cuts. But overall end-use demand remains a concern as the economic outlook remains uncertain in the global market.

The operating rate of Paraxylene plants in Asia remained low. Overall, the functioning of Paraxylene plants in Asia was around 60%, and the supply of Paraxylene in the region was sufficient. Meanwhile, in the downstream sector, demand slowed as spending in the finished goods sector warned amid recession fears. The trend was more prevalent in the polyester yarn and fiber sectors. Furthermore, Paraxylene losses also came in tandem with the downward trajectory in crude oil prices and downstream Purified Terephthalic Acid prices in China.

South Korea is the largest supplier to China, accounting for 36% of total Paraxylene imports in May. But Paraxylene uptake by China during June dropped 22% from South Korea, mainly due to the scheduled maintenance at significant producers in Korea, while solid demand from the US amid the open arbitrage led to continuous outflows of Korean cargoes. In addition, in Southeast Asia, operations at Thailand's PTT No. 1 aromatics unit at Rayong have resumed after a month-long period of maintenance on 30th June, which can produce 560,000 MT/year of Paraxylene.

ChemAnalyst Prediction states that "Crude oil price is still volatile, and the downstream demand for Purified Terephthalic Acid (PTA) and Polyethylene Terephthalate (PET) have reduced. Thus, considering the unstable global market, the price for Paraxylene is expected to stabilize in the forthcoming weeks."