Asian paraxylene prices reach year-to-date low amid relentless supply pressure

Asian paraxylene prices reached an year-to-date low July 24 on the back of growing regional supplies and scarce demand, sources said.

Platts assessed Asian paraxylene down $6/mt on the day at $1,000.50/mt CFR Taiwan/China July 24, the lowest so far this year, S&P Global Commodity Insights data showed.

Spot prices have steadily declined as buying appetite eased and producers raised operating rates, leading to a supply glut, a trader in Singapore said.

"[Buyers] just not buying or [waiting to] buy at low prices," the trader in Singapore said.

Early signs of a tough spot market were visible in the first half of 2024 as the much touted pull of PX and other aromatics for blending into gasoline weakened, traders said.

Producers, who were earlier looking to make gasoline, have now switched to aromatics, raising likelihood of a supply glut.

A producer in Southeast Asia decided to raise operation rates following a supportive benzene-naphtha spread despite excess supplies.

"[We] raised operation rates because gasoline season is over, so moved to produce more aromatics," the producer said.

Meanwhile, a fellow producer in the region will maintain PX operation rates at around 87% for now.

Apart from blending demand, the struggling Chinese downstream sector has further aggravated consumption-related issues, a trader in South Korea said.

"There is no gasoline demand impact and not good polyester side demand [as well]," the trader in South Korea said.

High inventories and thin buying interest have pushed major Chinese downstream producers to slash prices in a bid to lure customers, Commodity Insights previously reported.

"[For] downstream, look at [famous] brands and even products like PET and bottle chips, [producers] are cutting operation rates as no demand," a PTA producer in North Asia said.

The producer further highlighted that Q4 is generally a strong trading quarter, but not quite this time.

"Q3 last three years July to September is very good [for trading]. [Even] price in September and August is highest but this year it's different," the producer added.

In 2023, the PX spot value reached the highest level of $1,160/mt on Sept. 15, data from Commodity Insights showed.

China economy

China's efforts to revive its economy and boost consumption has yet to yield desirable results, traders said.

With the weakening macroeconomic conditions and the real estate market, polyester downstream producers will struggle to find buyers, a second trader in Singapore said.

"I think it is still due to the increasing oversupply and concerns about the Chinese economy. The Shanghai Composite Index just fell below 2900 points, reaching a nearly five-month low," the trader added.

Typhoon season

The current typhoon season has derailed PTA deliveries in China and parts of North Asia as well, the PTA producer said.

Typhoon Gaemi, which is expected to make landfall during the day, could severely impact production capacities, the same producer said.

"Now typhoon is coming to North Taiwan. It [could] hit Shanghai or Ninbgo too [and likely] maybe impact will be [more on] Fujian area," he said, adding that long term demand-supply balance remains under pressure. "No signal that one typhoon can bring up the market."