Singapore — Asian paraxylene plunged to a fresh near four-year low on further weakness across the oil and petrochemical markets following the return of the Chinese market after the week-long holiday.
The CFR Taiwan/China marker fell $30/mt from last Friday to $734/mt CFR Taiwan/China and $716/mt FOB Korea Monday. The marker was last assessed lower at $733/mt on February 18, 2016.
Sources have attributed the weakness to continued concerns from the coronavirus outbreak as market volatility and bearishness have dampened market sentiments and buying confidence.
There were no trades during the Platts Market on Close process Monday. While offers were aggressively lowered throughout the MOC, it failed to attract any buying interest.
Besides, there is no certainty on how much further the prices will fall but there is lack of drivers to support prices at the moment, said a source.
Another source noted that price recovery in the near-term might be tough without any sustainable support to fundamentals and overall sentiments.
Further, amid the weak supply-demand fundamentals, the market continues to monitor the operating rate at Zhejiang Petrochemical's No. 2 PX unit that has started test-run before the Lunar New Year break. The No. 1 and No. 2 PX lines each have a nameplate capacity of 2 million mt/year.
Similarly, in the downstream purified terephthalic acid market, prices have tumbled to almost four-year low as well to be assessed at $580/mt CFR China Monday amid weak demand and bearish sentiment.
The PTA CFR China marker was last lower at $576/mt on March 4, 2016, based on S&P Global Platts data.
The operating rate of the downstream Chinese polyester and textile sectors, which are labor intensive, could not resume as quickly as expected after China extended the Lunar New Year holidays in a bid to contain the virus.
Almost all the Chinese textile producers have shut operation since mid-January, with the overall operating rate of less than 10% of total capacity over the holiday, as S&P Global Platts reported earlier.
As a result, both PTA and polyester inventories have piled up during the holiday in China and there are talks to cut operating rate if downstream textile sector could not resume back soon.
China's Hanbang Petrochemical, also known as China Prosperity Jiangyin Petrochemical, has shut its 700,000 mt/year PTA line at Jiangyin, Jiangsu Monday without a clear restart timelines, market sources said Tuesday, though this could not be directly and immediately confirmed with the company.
The profit margin of Asian PTA producers are still under pressure, even though the PTA-PX spread has improved to around $92/mt Monday, higher than averaged $80/mt from November 2019 to mid-January. The typical PTA/PX spread breakeven level is $85-$120/mt for Asian PTA production.