Metallurgy / Chemicals / Rubber & Plastics

According to Huacheng's import and export data observation report, in January, the price of paraxylene (PX) in Asia showed an upward trend, boosted by factors such as China's adjustment of the COVID-19 epidemic policy and the preparation of US gasoline distributors for summer demand. According to the Platts energy evaluation data of S&P Global, the Asian PX mark price closed at US $1082/ton on January 30, up 15% from US $939.83/ton on January 4, and up 22% from the low point of US $890/ton on December 7 last year.

According to the Huacheng Import and Export Data Observation, in December last year, after China adjusted the control measures for the COVID-19, the market generally placed high hopes on the rebound of China's demand for PX and other aromatics, especially the market is expected to rebound strongly after the Lunar New Year. A Singapore trader said that China's low PX inventory has been driving up demand, and it is expected that buying interest will continue to increase in the coming weeks. "Everyone is looking forward to the return of Chinese buyers," said the trader.

According to some market sources, after the Spring Festival holiday, the operating rate of refined terephthalic acid (PTA) in the downstream of Northeast Asia has increased to 75%, and the operating rate of polyester has increased to 64%, which is expected to further increase in the coming weeks. A trader in Northeast Asia told S&P that its polyester plant operating rate may have exceeded 75% based on China's low PX inventory and strong polyester demand. Another Northeast Asian trader was more cautious. He pointed out that he had not seen a significant recovery in retail demand in the region. He said: "We are focusing on downstream products, such as furniture and clothing." In addition, some brokers said that as more ships carrying aromatics were sent to the United States, the rising sentiment of the market might affect the freight rate. Huacheng Import and Export Data Observation reported.

The market also expects the demand of benzene, m-xylene and PX as blending components and octane number promoters, especially in the US market. A Singapore trader said: "If the United States uses aromatics for gasoline blending and the Chinese market is further opened, the two largest economies will drive the PX market to strengthen." Asian producers who are expected to see strong demand in the United States avoid locking a large number of aromatics goods in regular supply contracts in advance. Because of the fear of tight supply and rising prices, American buyers have begun to seek to buy gasoline blending products, Huacheng Import and Export Data Observation Report.

In terms of other aromatics, market sources said that ethylbenzene, the precursor of styrene, was also used as an octane number promoter in the United States. However, the transportation of ethylbenzene from Asia to the United States was limited due to the bulk cargo handling capacity, making styrene producers unable to take advantage of potential arbitrage opportunities to make profits. In terms of pure benzene, the source reported that due to the abundance of pure benzene in Asia, the region will export a large amount of pure benzene, while the supply of pure benzene is still tight. On January 26, the price of pure benzene in the United States was estimated at 375 cents per gallon, the highest in five months. Although it was far lower than the record peak of 701 cents per gallon set on June 16, 2022, it was rising for most of January. Market sources said that the low inventory of gasoline in the United States also contributed to the current market optimism. According to the Huacheng Import and Export Data Observation, the US gasoline inventory closed at 232022 barrels in the week ended January 20, far lower than the average data of the previous five years.