Analysis on the market operation of PX in 2019 and its prospect in 2020
A brief review of the Asian PX Market in 2019
In 2019, the global economic slowdown, trade frictions between China and the United States, OPEC production cuts, and some stage of the Middle East unrest, the impact of crude oil prices in low volatility. Throughout the year, Brent spot traded in the range of $53~ $75 / BBL, Brent futures in the range of 55~75, WTI futures in the range of $46~ $66 / BBL. At the end of November, brent crude averaged $64.1 and spot prices were $64 a barrel, down 11% and 10% from the 2018 annual average, respectively. The average WTI crude futures and spot prices were $56.8 and $56.70 per barrel, respectively, down 13% from the 2018 annual average.
Naphtha price basically followed the trend of crude oil price all year round, but in the second and third quarters, the benefits of gasoline cracking were low, including maintenance of some cracking units, average demand, obvious pressure of supply exceeding demand, and naphtha price was under obvious pressure. Since the end of April, the price difference of naphtha cracking started to shrink all the way, and even showed a loss in June. In September, due to the attack on the Saudi oil field, the overall restoration of naphtha supply in the Middle East was slow, and some of the superposition units were repaired. Some cracking units in Asia ended, and the demand for naphtha recovered. In addition, the good efficiency of oil products also increased the demand for naphtha. Naphtha prices are clearly getting strong support, naphtha cracking spread has also widened to the year's high, even reached $100 / ton above the level in October.
By the end of November, THE price of PX was down $130 / ton by 14% from the start of the year. Absolute prices peaked at $1,132 a tonne in early March and fell by more than 30% to a low of $778 in early September. From January to November, the annual average price of PX per ton of CFR was $908, down 15% from last year.
To be specific, price fluctuations were relatively strong from January to February, and the trend of rapid decline was evident from March to June. Although the trend of the second half of the year was still weak, the pace of decline slowed down, especially after September.
In January and February, although the overall demand of the downstream industry in China was moderate due to the Spring Festival holiday, and the supply and demand of PX itself was also under accumulated inventory pressure, the price of PX still rose mainly due to the rise of crude oil price and the optimistic expectation of the market for centralized maintenance in the second quarter.But in March, though crude oil and naphtha prices continue to rise, but the constant force of petrochemical 4.5 million tons/year went into operation a new device, 2.25 million/tons of PX, faster than the market expected, have obvious impact on the market, at the same time airdropping and another 800000 ton/tons of PX unit also relaunch in March, PX prices falling fast. Especially by the end of April, the price of crude oil and naphtha fell, and another new unit of Hengli Petrochemical was put into operation successfully in May. Combined with the sluggish domestic demand for polyester, the price of PX fell rapidly again, although overseas PX plants were repaired one after another during this period, the whole domestic P was mainly deinventory.
From June to early July, when crude oil prices rebounded, downstream PTA prices rose, and PX processing difference was reduced to around $300 / ton, some PX plants had unplanned production cuts, and PX prices staged a staged rebound. But the price of PX came under significant pressure due to concerns about increased supply pressure from the later launch of new installations, before falling back again after a small rally. Then PX in naphtha and MX prices are relatively strong, MX - PX losses, naphtha - PX and compression to the edge of losses as well as support, and PX still face such as liaoyang petrochemical to bottleneck capacity, sinochem hong embellish, hainan refining phase ii, constant from brunei device such as a new production pressure increased supply of contradictions, general is given priority to with tight trading range.
In terms of benefits, the benefits of P this year show a trend of rapid compression. In January-February, as the downstream polyester enters the off-season of holiday, the price of PX rises with the help of crude oil, and the overall benefit of PX improves. After March, however, the benefits of PX were reduced rapidly due to increased competition from the release of new production. The PX-MX price differential quickly fell below key levels of $120 and $100 a tonne in July. The price difference between PX and naphtha also fell below the main reference level of $300 a tonne in September. At the end of November, the price difference between PX and naphtha had narrowed to about $220 a tonne, the lowest of the year. The spread between PX and MX fell to as low as $60 a tonne in early September and has since recovered slightly, but is still in the lower range of $70-90 a tonne.
In terms of monthly average spreads, the prices of PX, naphtha and MX were reduced to us $252 and US $79 per ton in November, down by 57% and 81% from their peaks of 585 and 409 in February, respectively. In particular, the spread between PX and MX has compressed to its lowest level since 2009. The price of PX and naphtha also hit new lows not seen since August 2010.
Prospect of PX market structure in Asia in 2020
2019 is a year of rapid expansion of China's PX production capacity, and its impact on the global PX industry has become obvious. China's dependence on PX imports has decreased, and the global PX benefits have been significantly compressed. China's PTA enterprises reduce their raw material stocking cycle.
By 2020, China's new production capacity is expected to be 1.8 million tons, and is likely to be concentrated In the fourth quarter of next year, PTA production capacity in 2020 is significantly higher than that of PX. At present, the theoretical production capacity may be as high as 16 million tons. However, Except for the first half of the year, Huangzhong production capacity is 6.2 million tons, while other more than 10 million tons are mainly in the fourth quarter of next year. Given the low demand growth rate and low efficiency next year, the actual increase is likely to be around 8.4 million tons. Therefore, in terms of the comparison of new production capacity,PX lags behind PTA again. But released from production, this year the domestic new capacity, especially in zhejiang production of petrochemical and constant from brunei will progress smoothly to release next year, next year Ⅳ X yields remain high growth. And will further squeeze other import market share. If from the point of view of polyester downstream, the middle and downstream of this year is still in the accumulation of inventory stage, supporting the polyester 9% slightly above the maximum growth rate. For next year, polyester output growth is expected to be around 6 per cent, given global economic growth and the equalisation of domestic downstream stocks. In 2019, polyester production will increase by 4.25 million tons, and the demand for pX will be about 2.4 million tons. In 2020, the increase of polyester production is expected to be around 3 million tons, corresponding to the demand for PX around 1.7 million tons. If The start of Zhejiang petrochemical smooth, even if only the zhi Zhejiang petrochemical its own output growth is expected to have been met. In addition, given the increased production of Hengyi Brunei and even Hengli Petrochemical, the competition in PX will continue to intensify in 2020. In this context, poor processing at X is expected to remain at a low level. Therefore, the increase in the volatility of PX plant operation in 2020 will continue to be a highly probable event, and some PX plants will even be shut down or withdrawn from the market. Of course due to the PTA will also enter the excesses of next year, is expected to benefit of each section of polyester industry chain will have different degree of compression, the industry of construction also will be raised and volatility, line will increase the frequency of the wave.