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Producers sign more 2019 Asian paraxylene contracts as plants seen to start up on time

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Producers sign more 2019 Asian paraxylene contracts as plants seen to start up on time

SIngapore — More term contract negotiations for Asian paraxylene were concluded this week between producers and buyers as major greenfield refineries will be starting production on time -- refuting earlier talk of delays, traders and end-users confirmed Wednesday.

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The term contracts were negotiated at premiums of minus 50 cents/mt to $3/mt for Platts CFR Taiwan/China term cargoes, depending on the origin, they stated.

Even though premiums for 2019 CFR Taiwan/China PX term cargoes have concluded in favor of producers at differentials that are slightly higher than those signed for the 2018 contracts, they fall short of previous expectation of flat to a small single digit alpha premiums, after producers lowered their offers following purported delays in major refinery startups.

Already, China's Fuhaichuang, formerly known as Dragon Aromatics, has restarted one of its two lines with 1.6 million mt/year of paraxylene capacity in early December, while Hengli Petrochemical's 20 million mt/year refinery in Dalian is expected to start feeding captive naphtha and other light oils for downstream aromatics production by June 2019.

Term contract prices in Asia use a discount to the average of 50% of the Asian contract price value and 50% of the monthly Platts CFR Taiwan/China spot marker average as the benchmark to price their cargo. In the event of a non-settlement, the formula reverts to 100% spot pricing.

Though buyers and sellers agreed over the discount for term cargoes next year, market participants told S&P Global Platts that disagreement over the definition for the Asian contract portion of the contracts remained.

Currently, there are five PX ACP sellers in Asia: Japan's JXTG Nippon Oil & Energy and Idemitsu Kosan, South Korea's S-Oil and SK Global Chemical, and ExxonMobil.

Typically there are seven ACP buyers: BP, Taiwan's Capco and Oriental Petrochemical (Taiwan) Corp., Japan's Mitsui Chemicals and Mitsubishi Chemical, and China's Yisheng Petrochemical and Jiangsu Shenghong Chemical Fiber Co.


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Meanwhile, India's Reliance Industries, has announced it will officially start negotiating the Asian Contract Price as an ACP seller for paraxylene from January 2019, and has also signed 2019 ACP-linked term contracts with at least three ACP buyers as of Wednesday morning, confirmed by counterparties.

However, Reliance's status as an ACP seller for 2019 is yet to be confirmed by other ACP sellers, said market participants.

Term contract negotiations are still ongoing.

--Frank Zeng,

--Edited by Ikhhlaq Singh Aujla,