Due to the fact that april paraxylene settled high during April, the parity with Asia was disrupted in the face of rapidly falling spot prices during that month. However, this left no room for confusion for May, and with April ACP continuing to decline the settlement in North America came early and without contention during the start of the month. May was settled at 81 cents/lb down 4.5 cent/lb compared to ACP fall of 3.86 cents/lb. This higher than parity settlement with Asia was under the premise that first of all NA PX parity with ACP has widened too much, and with falling crude oil price, a long MX position reducing cost push as well as a long PX, there was no reason to take an aggressive stance in adhering to a benchmarek PX price. With a long PX postion it is estimated that the BP’s Decatur plant may be possibly made to start end June.
The European market appears to be in good balance. The May drop of Euro 100 was in line with PX ACP movement. There was not much spot activity as prices fell for the most part of May. Given the spot prices of $1500 cfr, a reasonable spot price of $1550 was deemed as practical for European market. The supply chain has remained quite snug ever since. TOTAL had an outage of MX which constrained PX supply, but now the situation has resumed to normality. PKN Orlen’s PTA output is reaching a 100% operational rate, which goes to show that its captive PX plant may well be running at high efficiency as well. Generally there appears to be no length or shortness in the market. Market pundits appear to be of the opinion that the market may remain balanced until the start-up of Artlant’s new PTA capacity in Spain during 2012, which is still a long way away. In light of falling crude oil prices and a global long supply situation, the price of PX was settled @ $1605 late May and June spot prices have continued to float at the $1500 levels or slightly lower than this.
PX position in China has remained weak amidst a wavering foundation of feedstock prices and issues of oversupply are also playing a part in price softening. S-Oil’s new 900ktpa production capacity at Onsan in Korea is running now at full rates and the restart of CNOOC production in China in mid April, after a 45 day shutdown, is further adding length to the market. There is also additional supply from Urumqui in China. Further downstream demand is moderate and PTA suppliers have been sufficiently stocked as of start June. The notion of downstream demand being created by the start up of 2,000 ktpa Zhejiang Yisheng plant in Ningbo seems to be dampened with the negativity surrounding monentory tightening of the chinese government which could deter downstream demand in the mid term; and possibly for the rest of 2011.
