Paraxylene-naphtha spread in Asia narrows to near six-month low amid bearish PX

28-Mar-13

The price spread between paraxylene and naphtha in Asia narrowed US$26/mt day on day to a near six-month low of US$539.87/mt Tuesday, as ample PX supplies continued to push down CFR Taiwan/China PX price benchmark, Platts data showed. The last time the spread was lower was on September 28, 2012, when it was at US$538.88/mt. On Tuesday, the CFR Taiwan/China PX price sank US$30/mt day on day to be assessed at a seven-month low of US$1448.50/mt, while the CFR Japan naphtha value fell by four dollars to US$908.63/mt. The Asian paraxylene market was in a downtrend since February as downstream purified terephthalic acid producers in China reduced their plant operations after the Lunar New Year holidays in order to ease high inventory amid bearish demand. The run cuts created excess PX supplies in Asia, pressuring down the Asian PX market in the process. Run cuts by China's Hengli Petrochemical in particular, had a significant impact in the Asian PX market. The company reduced operations at its 4 mln tpa PTA plant in Dalian to around 80% capacity sometime in late February, Platts reported previously. Market sources said the Asian PX-naphtha spread will continue to narrow as heavy supplies of PX would likely accelerate. "PTA producers are reducing their operations further in April. The situation (in the Asian PX market) will likely be the same," said another market source. China's Zhejiang Yisheng Petrochemical will further cut its PTA plant operations from April. The company will shut its 1.8 million mt/year PTA plant in Hainan, which is currently running at 60% capacity, on April 1. Zhejiang Yisheng Petrochemical will also shut the 650,000 tpa No. 2 and the 2 million tpa No. 3 PTA plants at Ningbo from late April. The company has three PTA plants in Ningbo, of which the 650,000 tpa No. 1 plant is currently shut. The No. 2 and No. 3 plants are now running at around 80% capacity.