Asian paraxylene plunges to four-year low, breaches $700/mt level

Singapore — Asian paraxylene plummeted to a four-year low, falling below the $700/mt mark, to $687.67/mt CFR Taiwan/China and $669.67/mt FOB Korea Friday, on continued demand concerns due to the coronavirus outbreak.

The CFR Taiwan/China marker was last assessed lower at $681.17/mt on January 18, 2016.

The spread between paraxylene and physical naphtha CFR Japan was calculated at an average of $256.04/mt in February, as compared to an average of $257.69/mt in January, S&P Global Platts data showed.

Paraxylene price downturn began in January as the coronavirus outbreak in China pressured upstream oil complex and petrochemicals market on weak sentiments. Despite gaining some stability earlier, prices took a second hit following the worsening of the virus outbreak outside of China.

Fundamentals are largely unchanged on lackluster demand amid logistical constraints and congestion at the ports in China.

The price weakness has been attributed to continued demand concern and dampened buying confidence as downstream purified terephthalic acid faces persistently soaring inventories. China's PTA inventories are likely to reach 2.8 million mt to 3 million mt by the end of February, almost double what was in tanks in early January, according to market sources.

Sources further noted a lack of price support and limited upside, making it tough for prices to rebound in the short-term, weighing on bearishness and buying appetite among market participants.

Industry sources pointed to the possibility of cut in paraxylene plant operating rates if the situation persists.

Sources have also noted the uncertainty and impact of coronavirus on the economy in general, adding that the effect was not limited to the polyester chain.

"It would require some time before demand recovers even if current situation shows signs of improvement now. Besides, the market will not recoup demand loss from the last two months," said an industry source.

However, a trader said that buying interest may pick up if prices continue falling to a "low enough level" but also noted the ample physical cargo available in the market at the moment.