Reliance Industries, Hanwha Total To Join Paraxylene Asian Contract Price Negotiations

Reliance Industries, Hanwha Total to join Paraxylene Asian Contract Price negotiations

05-May-17

India's Reliance Industries Ltd and South Korea's Hanwha Total are looking to join the paraxylene Asian Contract Price negotiations, amid new capacity additions by both companies in 2017, sources at RIL and Hanwa Total said, as per Platts.
RIL's 2.2 million mt/year No. 2 aromatics plant at Jamnagar, commissioned in late-December 2016, is now fully operational and has brought the company's
total PX production capacity to 4.2 million mt/year. This makes RIL the world's second-largest PX producer, with a 9% share in global PX capacity and 11% in global PX production. Hanwha Total is negotiating entry into the ACP and will add 200,000 m tpa of PX production to its existing output capacity once it completes debottlenecking operations, scheduled over May-June, at its No. 2 Daesan plant.

The debottlenecking will bring Hanwha Total's No. 2 plant's PX capacity to around 1.26 mln mt/year from the current 1.06 mln mt/year, and will increase the company's total PX output to almost 2 mln mt/year. Traders and other ACP participants have said that the advantage the ACP settlement affords large producers is a guaranteed outlet for cargoes, while for buyers, stability of supply is afforded, at a fixed price.
Traders and ACP buyers have said that one criterion for considering a new supplier's entry into the ACP is a history of stable and regular PX supply (one year at least, according to some), while a requirement is two term contracts with two end-users/buyers of the ACP.
There are five PX ACP sellers in Asia: Japan's JX Nippon Oil and Energy, and Idemitsu Kosan, ExxonMobil, and South Korea's S-Oil and SK Global Chemical.
There are currently six ACP buyers: BP, Taiwan's Capco and Oriental Petrochemical (Taiwan) Corp., Japan's Mitsui Chemicals, and China's Yisheng Petrochemical and Jiangsu Shenghong Chemical Fiber Co.

Japan's Mitsubishi Chemical's participation as a permanent member remains uncertain following the sale of the company's PTA plants in India and China last year, market traders and sources in the company have said. RIL is also increasing exports at a time when the market is bracing for lower availability of cargo from India's other PX exporter, ONGC Mangalore Petrochemicals Ltd.
OMPL's aromatics plant at Mangalore is contracted to supply around 75% of the feedstock needs of the neighboring downstream JBF Petrochemicals' 1.25 million mt/year PTA plant, which was last heard to be targeting a startup in late-May, an OMPL source said earlier.
OMPL's last tender for paraxylene loading from January to June, 2017, sold 240,000 mt of cargo at a discount of approximately $37.50/mt to the Platts CFR Taiwan/China marker, according to traders.