© 2013 Platts, McGraw Hill Financial. All rights reserved.Asian Paraxylene:Are the golden years at an end?By Chua Sok Peng...
Introduction• Paraxylene, one of the most lucrative petrochemicalcommodities for the past five years, is expected tolose i...
Surge in PX capacity• Total Asian PX capacity -- based on announced projects coming on stream from2013 through 2017 -- is ...
Current PX capacity4
PTA demand• PX demand from downstream purified terephthalic acid plants would not keep up with that supply.• PTA capacity ...
PX-PTA spread6
PX-naphtha spread• Asian PX producers typically need a spread of $230/mt against feedstock naphtha to breakeven.• Based on...
PX-naphtha spread8
Asian & Middle Eastern PXSupply/Demand Balances9
Asian Petrochemicalscan10Take a free trial at:http://marketing.platts.com/forms/PLCOMF1337_APtrial
QuestionsContact:• Chua Sok Peng• Jim Foster11
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Platts Petrochemicals - Asian Paraxylene golden years at an end?

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Paraxylene, one of the most lucrative petrochemical commodities for the past five years, is expected to lose its shine in the next few years as it becomes victimized by overcapacity in Asia and the Middle East.

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Platts Petrochemicals - Asian Paraxylene golden years at an end?

  1. 1. © 2013 Platts, McGraw Hill Financial. All rights reserved.Asian Paraxylene:Are the golden years at an end?By Chua Sok Peng and Jim FosterMay 16, 2013
  2. 2. Introduction• Paraxylene, one of the most lucrative petrochemicalcommodities for the past five years, is expected tolose its shine in the next few years as it becomesvictimized by overcapacity in Asia and the MiddleEast.• The massive PX expansion is tied to energy demandin these regions, which resulted in more refineriesbeing built and in the process, more associatedintegrated petrochemical facilities.2
  3. 3. Surge in PX capacity• Total Asian PX capacity -- based on announced projects coming on stream from2013 through 2017 -- is expected to grow by 40% over the next five years, reaching40 million mt/year, according to Platts data.• PX power houses such as China and South Korea are taking the lead in theexpansion drive, with China gaining 3.5 million mt/year or 41% capacity from itscurrent 8.6 million mt/year.• South Koreas PX capacity growth over the same period would be by 5.1 millionmt/year or 94% from its current 5.4 million mt/year.• In the Middle East, PX capacity during the same period is expected to surge by200%, reaching 10.85 million mt/year by 2017, from the current 3.4 millionmt/year.• If operating rates follow historic norms in both regions -- 85% in Asia and 80% inthe Middle East -- total PX production is expected to climb by 69% during the nextfive years.• Total production in Asia would climb to 34 million mt/year, while Middle Eastproduction would climb to 8.7 million mt/year -- for a combined total PXproduction of nearly 43 million mt/year. (See related table: Current PX capacity)3
  4. 4. Current PX capacity4
  5. 5. PTA demand• PX demand from downstream purified terephthalic acid plants would not keep up with that supply.• PTA capacity in Asia is expected to climb by 46% over the next five years, reaching nearly 67 millionmt/year in 2017. Given recent poor production economics, run rates have been reduced to 50% to60% of capacity.• Even if run rates were to improve to 75% of capacity, the PX surplus in Asia would climb above 4million mt in 2014, and surpass 8 million mt by 2017, Platts data showed.• The anticipated surplus in 2017 could be cut in half, though, if PTA producers increase operatingrates to 85% as production economics improve.• Any move by PX producers to reduce production rates below 80% also would potentially erode theanticipated surplus.• China, the worlds largest polyester producer, had been on an expansion drive for the past fiveyears in a bid to reduce reliance on imports.• Chinas PTA capacity stood at 33 million mt/year in 2012 and another 19 million mt/year is beingplanned from now through 2015.• With the new PTA capacities, increased PX demand, based on a PX conversion factor of 0.66, wouldstand at 12.54 million mt by 2015. If PTA plants run rates stay low at 60%, then new PX demand forChina would fall to 7.5 million mt/year. (See related table: PX-PTA spread)5
  6. 6. PX-PTA spread6
  7. 7. PX-naphtha spread• Asian PX producers typically need a spread of $230/mt against feedstock naphtha to breakeven.• Based on historical data from Platts since 2006, the lowest annual PX-naphtha spread was $340/mt in 2010 with thepeak at $625/mt in 2011.• The huge margin was largely due to new PTA capacity expansions in China, which drove up demand for PX feedstock,and in turn pushed up prices.• Looking ahead, with more PX capacities and limited growth in PTA capacities, the PX-PTA balance would tilt in favorof the end-users.• After suffering losses for three years, PTA makers are looking for a break. "We dont expect prices to jump drasticallybut margins should start to improve for us," said a PTA maker in China.• Meanwhile, a PX producer in China felt that the PX surplus scenario was too pessimistic. "A PX expansion will facethe same feedstock limitation as a PTA expansion," he said.• "Without sufficient naphtha, mixed xylene or toluene, the new PX plants in South Korea and wont be able to run atfull capacity.• Plants in China and Middle East are integrated so they actually stand a better chance of full operation.“• He added: "The PX party is over but we wont expect to be in the red. If there is too much PX, we can always use itfor gasoline blending." (See related table: PX-naphtha spread)7
  8. 8. PX-naphtha spread8
  9. 9. Asian & Middle Eastern PXSupply/Demand Balances9
  10. 10. Asian Petrochemicalscan10Take a free trial at:http://marketing.platts.com/forms/PLCOMF1337_APtrial
  11. 11. QuestionsContact:• Chua Sok Peng• Jim Foster11

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