Ships wait in queue to discharge paraxylene at China's Jianyin port on L/C delays, high inventories

Singapore — The delay in the processing of letters of credit and high paraxylene inventories has resulted in a queue of ships waiting to discharge paraxylene cargoes at China's Jiangyin port, and this delay is likely to persist in the coming weeks as the market enters the new delivery month of May, market sources said.

The port of Jiangyin has been of particular concern as market participants spoke of vessels waiting approximately two weeks before being able to discharge their cargoes.

"There are vessels waiting and delays in discharge [at Jiangyin]," a source with knowledge of the matter told S&P Global Platts Tuesday.

The situation may be exacerbated with China's May 1-5 Labor Day holidays just around the corner, prompting at least one Chinese paraxylene buyer to request its sellers to deliver H2 May cargoes prior to declaration.

The nomination process in the Asian PX market involves declaration of the half-month laycan for delivery by the seller and the port by the buyer before midnight of the 15th of each month.

"There's nothing we can do besides waiting, wait for further notice," an Asian source said.

Waiting time is becoming even more uncertain moving into May, at least two traders said, as the demurrage piles on due to the delayed discharge. According to S&P Global Platts data, the latest demurrage rate for a 20,000 dwt PX vessel is $18,000/day. There have been requests to negotiate for a lower demurrage rate on the back of continued delays at Chinese ports although nothing has been agreed yet, a shipping source said earlier this month.

Chinese PX buyers have been requesting for later arrivals, trying to push back taking delivery of cargoes from the first half of the month to the second half of the month, post-declaration. Considering the dire and difficult situation in the polyester market, participants have been trying their level best to fulfill requests of port deviation or changes in laycan to ensure the market can continue to operate normally, market sources said.

Unfortunately, many PX cargoes have been nominated for delivery in H1 May, heightening the likelihood of congestion, market sources said. As both buyers and sellers are experiencing high PX inventories, producers are keen to load earlier, while buyers are pushing back arrivals, market sources said. With extended delays expected at the port of Jiangyin, a trader has also raised concerns of late delivery at the next port of call, which has been declared to discharge in H2 May, should the situation at Jiangyin worsen.

During the Platts Market on Close assessment process, 23 May-delivery PX cargoes have changed hands, with South Korea' GS Caltex and SKGC Singapore each buying five cargoes, while Glencore Singapore, Samsung C&T and Total Trading Asia buying three cargoes each. Litasco and SK Networks have bought two cargoes each.

On the sell-side, BP Singapore has sold 10 cargoes, Chinese trader Yisheng sold 8 cargoes, Glencore sold two, while Mercuria Singapore, PTT International Trading and Total Trading Asia sold one cargo each.