Paraxylene prices higher than naphtha, producers continue to run facilities at full capacity

Current paraxylene (PX) prices in Asia that remain much higher than naphtha values despite recent sharp falls in the spread, have motivated South Korean PX producers to run plants at full capacity. As per ICIS, checks with HC Petrochem, KP Chemical, GS Caltex, Samsung Total (STC), S-Oil, and SK Energy revealed that all their PX facilities are running at 100% capacity. For four consecutive months, the average price spread between PX and feedstock naphtha fell to US$505.69/ton, dropping by 33.8% from US$764.5/ton in February. In the same time period, PX prices (based on monthly average) shed 12% to US$1455/ton CFR (cost and freight) China/Taiwan this month. This fall can be attributed partly to weak buying from downstream purified terephthalic acid (PTA) market, while average naphtha values gained rose 6% to US$949.8/ton CFR Japan. Although the spread has weakened, it is still more than double the US$200-250/ton price gap that PX producers require to break even on production cost. The wide spread will encourage PX makers to continue running plants at full tilt notwithstanding current weakness in the downstream PTA market. South Korean producers are counting on Jiangsu Sanfangxiang’s new 1.2 mln tpa PTA plant coming on stream, to absorb their PX output. Also , Zhejiang Yisheng Petrochemical in China, will also begin operations at its 1 mln tpa compressor later this month or early July.
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