Asian PX near 2-month lows on subdued gasoline blending demand; optimism lingers

Asian paraxylene prices hovered near two-month lows, throttled by sluggish gasoline blending demand, waning downstream support from China and a struggling PTA market, but trading optimism for April- and May- arrival cargoes offered a sliver of hope to trade participants.

Platts assessed Asian paraxylene CFR Taiwan/China at $1,002.67/mt March 8, the lowest since Jan. 11 when it was at $1,002.33/mt, data from S&P Global Commodity Insights showed. The assessment was unchanged on the day.

PX prices reached a one-month high on Feb. 27 when it was assessed at $1,044.67/mt, S&P Global previously reported.

Spot PX prices are likely to gain strength, driven largely by gasoline blending demand ahead of the US summer driving season, a trader in Singapore said.

"Basis current situation, I don't think there's a big change [in fundamentals] in the next few weeks unless gasoline demand kicks," the trader said. "Personally, [I] don't feel like it's happening soon."

Blending demand from the US will likely draw PX cargoes from Asia, which, in turn, would boost regional prices and tighten supplies, sources anticipate, but added that little of those hopes have materialized so far.

The PX market structure continues to remain in contango, a second trader in Singapore said. "If you see, it's a contango market means everyone believes PX will be used for blending in summer," he said.

In fact, flows of benzene to the US have been more prominent leading to an uptick in prices, traders said.

Benzene is used to produce ethyl benzene, which is then used as a blendstock.

At the Asia close March 8, benzene was at a premium of $21/mt over paraxylene, and the highest since July 20, 2022, when it was assessed at a premium of $37.67/mt, S&P Global data showed.

"We [see] BTX exports was active," a shipbroker in Singapore said referring to exports of benzene, toluene and mixed xylenes to the US.

PTA pain, supply build up

Apart from poor blending demand, PTA producers have also shied away from buying too much PX as margins remain throttled and downstream operation rates are slow to recover, sources said.

Several PTA production units in China will possibly undergo turnarounds in the near term, which is choking demand for PX, the first Singapore trader said.

However, while demand remains low, PX production especially in North Asia continues on the back of a fairly healthy PX-naphtha spread, the same trader said.

"If this spread [remains high], people will not stop or reduce [production] and continue [making PX]," he said. "Until the spread softens, people won't cut production."

In February, the PX-naphtha spread averaged at $350.17/mt, largely in line with the typical breakeven level of around $340-$350/mt for most producers, S&P Global data showed.

However, as PX prices softened and naphtha values stayed firm in March, the spread began to lose some ground, the data showed.

At the Asia close March 8, the PX-naphtha spread was assessed at $292.17/mt, the lowest since Feb. 28, 2023, when it was assessed at $287.08/mt, the data showed.

Market participants are hopeful that a narrowing spread will curb production appetite.

Optimism intact

Despite weakening PX prices, optimism over an uptick in buying interest remains among market participants.

"Even though PX [prices] have gone down, it will recover soon," the second trader in Singapore said.

As more benzene flows [to the] West, prices are bound to rise prompting buyers to look at PX as an option, the trader said.

"PX may be next [to go to USA]," a PTA producer in North Asia said.