Home
>
News
>
Industry News
Industry News
Chemical demand will continue to support PX to maintain good profits
Looking back at the beginning of 2023, the market had widespread expectations for the aromatics blending oil market in the new year, and by the end of 2022, the market had already traded a round of early stock market. In March 2023, combined with the positive effects of centralized maintenance of PX devices in Asia, the PX naphtha oil price difference began to rise, rising from below $300/ton in February to over $450/ton, leading to a surge in oil demand trading. The price difference between PX and naphtha remained high until mid September, lasting for six months. Since mid September, the gasoline specifications in the United States have switched, global gasoline consumption has weakened, and the cracking price difference has continued to decline. In mid October, the US RBOB WTI price difference dropped to the bottom level below $10 per barrel, and then rebounded slightly, lacking any boost to the aromatics market. This is the main reason for the continued weakness of PX futures after their listing. Overall, the price difference of gasoline cracking in 2022 fluctuated significantly, while the price difference of gasoline cracking in the peak season of 2023 was at a relatively high level, which still boosted the aromatic hydrocarbon market.
In the new year, with the completion of global energy and chemical logistics restructuring, the contradiction between supply and demand in the market is easing, and the high point of gasoline cracking price difference is decreasing year by year. There is an expectation of weakening the logic of oil adjustment, but the strength of PX prices in the Asian region still needs to be analyzed from multiple perspectives.
[US summer oil blending component imports slightly increased]
The logic of aromatics oil transfer is mainly due to the increasing demand for high octane aromatic hydrocarbons during the summer gasoline consumption peak season in the second and third quarters of the United States. It can be considered that the logistics restructuring after geopolitical conflicts is the main reason for the strengthening of this logic. After nearly two years of adjustment, a new pattern has emerged in the global trade of energy such as crude oil and natural gas, as well as related finished oil and chemical raw materials, and market fluctuations have gradually slowed down.
Data shows that as of the end of August, the import volume of heavy gas oil (VGO) in the United States decreased by 6% year-on-year, the processing volume of FCC and HC units in refineries in the United States decreased by 0.6% year-on-year, gasoline consumption in the United States increased by 1.6% during the same period, and the import of blended oil components increased by 6.9% year-on-year. As of the end of October, the cumulative increase in imports of oil blending components in the United States exceeded 10%. From this, it can be seen that although the apparent consumption of gasoline in the United States has slightly increased, due to the shortage of gasoline blending components in the summer of the United States, it is still necessary to increase the import of high octane components. Among them, the import of reforming blending components has shown a year-on-year decrease, while the import growth rate of conventional blending components of aromatic hydrocarbons is over 20%. Therefore, the United States still needs to increase the production of aromatic hydrocarbon products such as MX and xylene for summer gasoline.
From the perspective of import sources, in the past two years, North America and Europe, the two main import sources of the United States' reformed oil components, have continued to reduce their exports to the United States, while the conventional adjusted components from North America, North Africa, and Northeast Asia have shown significant growth. The import volume from Europe has recovered compared to 2022, but it is still lower than the levels of 2019 and 2021.
Asia's aromatic hydrocarbon exports to the United States show an upward trend
From a regional perspective, in 2021, Europe's exports of conventional oil blending components to the United States accounted for about 57%, Asia accounted for about 22%, North America accounted for about 10%, and Africa accounted for less than 3%. In 2022, the proportion of exports of conventional oil blending components from Europe to the United States decreased to 49%, Asia's proportion increased to 23.6%, North America's proportion increased to 18%, and Africa's proportion increased to over 3%. In 2023, the proportion of exports of conventional oil blending components from Europe to the United States recovered to 51%, continued to grow by about 1 percentage point in Asia, increased to over 4% in Africa, and decreased to 16% in North America. Overall, the export of aromatic products from the Asian region to the United States has maintained an upward trend, which is also the main reason for the tight supply of PX and pure benzene in the Asian region.
In addition, South Korean export data shows that, except for toluene and xylene, South Korean pure benzene exports to the United States maintained a significant growth trend in 2023. After importing pure benzene from the United States, local cheap raw materials such as ethylene and propylene can be used to synthesize oil blending components. In addition, there is also some local chemical demand.
From the above analysis, it can be seen that the apparent consumption of gasoline in the United States has slightly increased, and its import demand for high octane value blended fuel components in summer remains high, especially for conventional blended fuel components such as aromatics, which continue to grow. Although the supply in Europe has recovered during the year, regions such as Asia and North Africa have also maintained a growth trend. Under the seasonal demand of overseas oil transfer, the global aromatic hydrocarbon market is showing a strong trend in spring and summer, and weak trend in autumn and winter. The supply of PX and pure benzene in the Asian region is seasonal tight.
In the new year, there is some uncertainty in the summer demand for imported blending components in the United States. The main variables include a possible decline in gasoline demand in the United States, and the supply of high octane summer blending components is expected to increase after the United States lifts Venezuela's oil sanctions to supplement heavy components. The author believes that the future market can pay attention to the changes in the feeding volume of related secondary processing devices in the United States.
[Oil blending and chemical profits determine product flow]
The above analysis of changes in the supply of gasoline blending components in the United States can only be considered superficial. The seasonal demand for gasoline blending components in the United States has led to tight supply of aromatic products in Asia in the second and third quarters. However, whether related products can flow to the US blending market depends on profits. Every summer in the United States, there is a demand for oil blending, but in the past two years, the chemical market has been significantly affected. In addition to the abundant profits in the gasoline market attracting chemical raw materials to actively flow to the energy market, it is also related to the weakness of the chemical market. In other words, products will choose to flow to areas with better profits.
According to historical analysis, the price difference of overseas gasoline cracking has significantly increased around 2012. At that time, a large amount of domestic PTA production capacity was invested, and the resonance between chemical and oil demand made PX a value highland. However, the market focus was still on the supply and demand of the chemical industry in the chemical market, and the chemical industry had abundant profits. Therefore, the competitive advantage between the demand for oil blending of aromatic hydrocarbon products and the demand for chemical products was not obvious, and the logic of oil blending did not become the main line of the market. However, since 2020, the plan to reduce oil consumption and increase chemical efficiency in domestic refineries has led to rapid growth in downstream chemical facilities of refineries, which has impacted chemical profits. Coincidentally, the recovery of overseas gasoline consumption and geopolitical conflicts in 2022 have brought about abundant oil profits. The chemical production profits of aromatic raw materials such as MX and toluene are meager or even at a loss, so more people choose to stay in the blending pool or add them as blending products to gasoline. The low profit chemical market is facing a shortage of raw materials, and the competition between oil blending and chemical raw materials has attracted market attention. The logic of oil blending dominates the trend of the aromatic hydrocarbon market.
[Pay attention to the load increase of PX production equipment]
For the expected trend of PX in the new year, the absolute price still follows the rhythm of crude oil, but its product profit is closely related to the industry supply and demand pattern. In the new year, there is a production plan for the 3 million ton unit of Yulong Petrochemical in China, and there is still some uncertainty whether it can be finally put into operation. Overall, new domestic PX production capacity has entered a period of slow growth, and overseas device production is mainly concentrated around 2025. Therefore, the supply pattern of the PX market is basically clear, and the future supply increase will mainly come from the increase in the load of production equipment.
In the past two years, the operating rate of PX in the Asian region has fluctuated around 70%, mainly due to a shortage of raw materials for short process units such as MX and toluene. In the future, if the performance of gasoline cracking in the new year is weak and the efficiency of fuel adjustment is not ideal, then the supply of raw materials in the PX industry will recover and the start of production is expected to rebound. According to the statistics of third-party information institutions, based on the analysis of 78.92 million tons of PX production capacity in the Asian region, assuming a 10 percentage point increase in operating rate, it corresponds to an annual production growth of nearly 7.9 million tons. However, the recovery of PX supply still depends on the flow of raw materials MX and toluene in the short process unit, which is the profit performance of short process unit production.
The downstream chemical demand is mainly concentrated in PTA. From the current market expectations, Yisheng Hainan's 2.5 million ton PTA new device is put into operation, and Hanbang's 2.2 million ton long-term shutdown old device has a restart plan. In 2024, the planned production capacity of the device is about 7 million tons, with a total increase of over 11 million tons of PTA production capacity. The corresponding PX demand is about 7.5 million tons, and the chemical demand for PX remains growing. However, the final growth in demand also depends on the consumption of terminal textiles and clothing. If the consumer market is unable to digest the new production capacity of PTA, it may lead to the PTA industry maintaining a low profit and low operating conditions, and ultimately the growth rate of demand for PX is lower than expected.
At present, after the continuous contraction of terminal textile and clothing exports in 2023, the impact of the European and American consumer markets on China's textile and clothing market is limited. In the future, as the European and American market economy lands, there may be an inventory increase cycle, and the export of domestic textiles and raw materials intermediate products continues to support the polyester market to maintain good demand resilience. At the same time, the increase in domestic travel has led to a good recovery in textile and clothing consumption, and there are good expectations for future domestic demand and exports. Therefore, maintaining optimistic expectations for terminal demand in the new year will boost upstream raw materials PX and PTA.
[Future prospects]
By inferring the changes in the import market of gasoline blending components in the United States, it can be concluded that Asia is an important source of supply for high octane blending components in the summer season, leading to a decrease in the operation of short process units and a reduction in PX supply in the Asian region. Long process units have provided good profits for two consecutive years.
In the new year, with the completion of global energy and chemical logistics restructuring, the contradiction between supply and demand in the market is easing, and the high point of gasoline cracking price difference is decreasing year by year. There is an expectation of weakening the logic of oil adjustment, but the strength of PX prices in the Asian region still needs to be analyzed from multiple perspectives.
[US summer oil blending component imports slightly increased]
The logic of aromatics oil transfer is mainly due to the increasing demand for high octane aromatic hydrocarbons during the summer gasoline consumption peak season in the second and third quarters of the United States. It can be considered that the logistics restructuring after geopolitical conflicts is the main reason for the strengthening of this logic. After nearly two years of adjustment, a new pattern has emerged in the global trade of energy such as crude oil and natural gas, as well as related finished oil and chemical raw materials, and market fluctuations have gradually slowed down.
Data shows that as of the end of August, the import volume of heavy gas oil (VGO) in the United States decreased by 6% year-on-year, the processing volume of FCC and HC units in refineries in the United States decreased by 0.6% year-on-year, gasoline consumption in the United States increased by 1.6% during the same period, and the import of blended oil components increased by 6.9% year-on-year. As of the end of October, the cumulative increase in imports of oil blending components in the United States exceeded 10%. From this, it can be seen that although the apparent consumption of gasoline in the United States has slightly increased, due to the shortage of gasoline blending components in the summer of the United States, it is still necessary to increase the import of high octane components. Among them, the import of reforming blending components has shown a year-on-year decrease, while the import growth rate of conventional blending components of aromatic hydrocarbons is over 20%. Therefore, the United States still needs to increase the production of aromatic hydrocarbon products such as MX and xylene for summer gasoline.
From the perspective of import sources, in the past two years, North America and Europe, the two main import sources of the United States' reformed oil components, have continued to reduce their exports to the United States, while the conventional adjusted components from North America, North Africa, and Northeast Asia have shown significant growth. The import volume from Europe has recovered compared to 2022, but it is still lower than the levels of 2019 and 2021.
Asia's aromatic hydrocarbon exports to the United States show an upward trend
From a regional perspective, in 2021, Europe's exports of conventional oil blending components to the United States accounted for about 57%, Asia accounted for about 22%, North America accounted for about 10%, and Africa accounted for less than 3%. In 2022, the proportion of exports of conventional oil blending components from Europe to the United States decreased to 49%, Asia's proportion increased to 23.6%, North America's proportion increased to 18%, and Africa's proportion increased to over 3%. In 2023, the proportion of exports of conventional oil blending components from Europe to the United States recovered to 51%, continued to grow by about 1 percentage point in Asia, increased to over 4% in Africa, and decreased to 16% in North America. Overall, the export of aromatic products from the Asian region to the United States has maintained an upward trend, which is also the main reason for the tight supply of PX and pure benzene in the Asian region.
In addition, South Korean export data shows that, except for toluene and xylene, South Korean pure benzene exports to the United States maintained a significant growth trend in 2023. After importing pure benzene from the United States, local cheap raw materials such as ethylene and propylene can be used to synthesize oil blending components. In addition, there is also some local chemical demand.
From the above analysis, it can be seen that the apparent consumption of gasoline in the United States has slightly increased, and its import demand for high octane value blended fuel components in summer remains high, especially for conventional blended fuel components such as aromatics, which continue to grow. Although the supply in Europe has recovered during the year, regions such as Asia and North Africa have also maintained a growth trend. Under the seasonal demand of overseas oil transfer, the global aromatic hydrocarbon market is showing a strong trend in spring and summer, and weak trend in autumn and winter. The supply of PX and pure benzene in the Asian region is seasonal tight.
In the new year, there is some uncertainty in the summer demand for imported blending components in the United States. The main variables include a possible decline in gasoline demand in the United States, and the supply of high octane summer blending components is expected to increase after the United States lifts Venezuela's oil sanctions to supplement heavy components. The author believes that the future market can pay attention to the changes in the feeding volume of related secondary processing devices in the United States.
[Oil blending and chemical profits determine product flow]
The above analysis of changes in the supply of gasoline blending components in the United States can only be considered superficial. The seasonal demand for gasoline blending components in the United States has led to tight supply of aromatic products in Asia in the second and third quarters. However, whether related products can flow to the US blending market depends on profits. Every summer in the United States, there is a demand for oil blending, but in the past two years, the chemical market has been significantly affected. In addition to the abundant profits in the gasoline market attracting chemical raw materials to actively flow to the energy market, it is also related to the weakness of the chemical market. In other words, products will choose to flow to areas with better profits.
According to historical analysis, the price difference of overseas gasoline cracking has significantly increased around 2012. At that time, a large amount of domestic PTA production capacity was invested, and the resonance between chemical and oil demand made PX a value highland. However, the market focus was still on the supply and demand of the chemical industry in the chemical market, and the chemical industry had abundant profits. Therefore, the competitive advantage between the demand for oil blending of aromatic hydrocarbon products and the demand for chemical products was not obvious, and the logic of oil blending did not become the main line of the market. However, since 2020, the plan to reduce oil consumption and increase chemical efficiency in domestic refineries has led to rapid growth in downstream chemical facilities of refineries, which has impacted chemical profits. Coincidentally, the recovery of overseas gasoline consumption and geopolitical conflicts in 2022 have brought about abundant oil profits. The chemical production profits of aromatic raw materials such as MX and toluene are meager or even at a loss, so more people choose to stay in the blending pool or add them as blending products to gasoline. The low profit chemical market is facing a shortage of raw materials, and the competition between oil blending and chemical raw materials has attracted market attention. The logic of oil blending dominates the trend of the aromatic hydrocarbon market.
[Pay attention to the load increase of PX production equipment]
For the expected trend of PX in the new year, the absolute price still follows the rhythm of crude oil, but its product profit is closely related to the industry supply and demand pattern. In the new year, there is a production plan for the 3 million ton unit of Yulong Petrochemical in China, and there is still some uncertainty whether it can be finally put into operation. Overall, new domestic PX production capacity has entered a period of slow growth, and overseas device production is mainly concentrated around 2025. Therefore, the supply pattern of the PX market is basically clear, and the future supply increase will mainly come from the increase in the load of production equipment.
In the past two years, the operating rate of PX in the Asian region has fluctuated around 70%, mainly due to a shortage of raw materials for short process units such as MX and toluene. In the future, if the performance of gasoline cracking in the new year is weak and the efficiency of fuel adjustment is not ideal, then the supply of raw materials in the PX industry will recover and the start of production is expected to rebound. According to the statistics of third-party information institutions, based on the analysis of 78.92 million tons of PX production capacity in the Asian region, assuming a 10 percentage point increase in operating rate, it corresponds to an annual production growth of nearly 7.9 million tons. However, the recovery of PX supply still depends on the flow of raw materials MX and toluene in the short process unit, which is the profit performance of short process unit production.
The downstream chemical demand is mainly concentrated in PTA. From the current market expectations, Yisheng Hainan's 2.5 million ton PTA new device is put into operation, and Hanbang's 2.2 million ton long-term shutdown old device has a restart plan. In 2024, the planned production capacity of the device is about 7 million tons, with a total increase of over 11 million tons of PTA production capacity. The corresponding PX demand is about 7.5 million tons, and the chemical demand for PX remains growing. However, the final growth in demand also depends on the consumption of terminal textiles and clothing. If the consumer market is unable to digest the new production capacity of PTA, it may lead to the PTA industry maintaining a low profit and low operating conditions, and ultimately the growth rate of demand for PX is lower than expected.
At present, after the continuous contraction of terminal textile and clothing exports in 2023, the impact of the European and American consumer markets on China's textile and clothing market is limited. In the future, as the European and American market economy lands, there may be an inventory increase cycle, and the export of domestic textiles and raw materials intermediate products continues to support the polyester market to maintain good demand resilience. At the same time, the increase in domestic travel has led to a good recovery in textile and clothing consumption, and there are good expectations for future domestic demand and exports. Therefore, maintaining optimistic expectations for terminal demand in the new year will boost upstream raw materials PX and PTA.
[Future prospects]
By inferring the changes in the import market of gasoline blending components in the United States, it can be concluded that Asia is an important source of supply for high octane blending components in the summer season, leading to a decrease in the operation of short process units and a reduction in PX supply in the Asian region. Long process units have provided good profits for two consecutive years.
Looking ahead to the new year, while the supply of summer gasoline blending components to the United States increases in other overseas regions, the import dependence of summer gasoline blending components may decrease due to the increase in imports of heavy crude oil from the United States. The blending logic in the Asian aromatic hydrocarbon market will weaken, but PTA planned production volume is still high, and there are expectations of continuous improvement in terminal demand, while chemical demand maintains a growth trend. In addition, PX's new production capacity has slowed down, and the logic of aromatics oil adjustment may weaken. However, chemical demand will continue to support it in maintaining good profits. Therefore, it is recommended to buy long on dips between PX and crude oil prices. The risk point is that the terminal consumption of gasoline and textile clothing is also lower than expected.
JIN DUN CHEMICAL has built a special (meth) acrylic monomer manufacturing base in ZHEJIANG province. This makes sure the stable supply of HEMA, HPMA, HEA, HPA, GMA with high level quality. Our special acrylate monomers are widely used for thermosetting acrylic resins, crosslinkable emulsion polymers, acrylate anaerobic adhesive, two-component acrylate adhesive, solvent acrylate adhesive, emulsion acrylate adhesive, paper finishing agent and painting acrylic resins in adhesive.We have also developed the new and special (meth) acrylic monomers and derivatives. Such as the fluorinated acrylate monomers, It can be widely used in coating leveling agent, paints, inks, photosensitive resins, optical materials, fiber treatment, modifier for plastic or rubber field. We are aiming to be the top supplier in the field of special acrylate monomers, to share our rich experience with better quality products and professional service.
