Low profits in the hottest PX industry may become

PX industry low profit or normal

PX industry low profit or normal

June 27, 2019

compared with previous high profits, the profits of the paraxylene (PX) industry in the first half of this year were not satisfactory. Especially since March, PX's profit has shrunk sharply and was once below the cost line. Industry insiders believe that low profits may become the new normal coating of PX industry in the future

from the timeline, the price of CFR Taiwan PX on April 15 has fallen by US $201, or 18.8%, compared with the beginning of March, which has stunned the industry

throughout the PX industry, the unit is basically aromatics combination, with naphtha raw materials as the main profit reference method. Before 2018, the profit of PX tons was usually $50~100. From July, the industry ushered in a real profiteering era, with a maximum profit of $365. This profit space remained for about half a year. Just entering 2019, the profit was ok, but the profit began to shrink rapidly in March, and even suffered a loss in May, with a loss of about $20 per ton of products. Although the PX price has been corrected recently, enterprises are still hovering near the cost line

domestic capacity release

according to the analysis of insiders, an important factor causing the continuous narrowing of PX profits is the massive release of domestic new capacity

previously, the domestic PX industry developed slowly, and its downstream PTA polyester industry continued to develop rapidly, resulting in an increasing supply gap of PX, which had to rely on imported goods to make up for the lack of supply, and the industry had a high degree of external dependence

Japan and South Korea and other major PX exporting countries started their industries earlier, with serious overcapacity. About two-thirds of their output depends on exports, and China has become the best choice. In 2009, the import volume of PX in China was 3.7 million tons, which soared to 15.903 million tons in 2018. In nine years, the import volume increased by 4.3 times, and the import dependence was as high as 61%

in the face of this situation, although the development of domestic PX industry has twists and turns, the centralized release period of new capacity has also arrived

according to Wang Chunming, from 2009 to 2014, many new PX units were put into operation, and the production capacity increased relatively rapidly; From 2015 to 2018, no new units were put into operation, and only some units were slightly expanded. Since this year, Dalian Hengli 4.5 million T/a PX plant has been put into operation, Sinochem Hongrun 600000 T/A and Hainan refining and chemical 1million T/a PX plant will also be put into operation, and at that time, the external dependence of the PX industry will be effectively reduced

"At present, the main products of the company in China include electronic universal testing machines, hydraulic universal testing machines, and the elongation at break of ordinary polymer materials is also mostly between 50% and 100%. In competition with PX export enterprises such as Japan and South Korea, the overall supply in Asia will be surplus. At present, PX enterprises are basically in the breakeven state. If profits continue to shrink, some enterprises will reduce production and burden. Therefore, PX enterprises are likely to be near the break even line. ”Wang Chunming analyzed

the rise of private enterprises

in the early stage of PX industry development, only UOP company in the United States and IFP company in France mastered the complete set of aromatics technology, and the market formed a monopoly. However, with the increase of PX technology providers, powerful private enterprises also began to launch the project. For example, the PX projects of Qingdao Lidong and Dalian Fujia Dahua were put into operation in 2007 and 2009 respectively, which gave private enterprises a good start in developing the PX field and broke the monopoly situation

however, the development of PX is not plain sailing. Due to long-term disputes and public opinion pressure, enterprises have always maintained a cautious attitude towards PX projects, which also led to the slow development of the domestic PX industry

this year, private enterprises rose again, including PX projects such as Hengli petrochemical, Zhejiang Petrochemical, Sinochem Hongrun, Dongying United Petrochemical, etc. Jinlianchuang predicts that by the end of 2019, the proportion of PX capacity of private enterprises will increase to 65.5%, Sinopec Group will account for about 20.7%, PetroChina will account for 10%, and CNOOC will account for 3.7%

insiders believe that with the "but rise" of private enterprises, the market competition in the PX industry will intensify at that time, and the era of high profits may officially end