Asian paraxylene reaches new year-to-date high, defying sluggish China downstream

Asian paraxylene prices reached a fresh year-to-date high March 18, with market participants gearing up for further gains on optimism over US gasoline blending demand, coupled with tighter Asian supplies, according to producers and traders.

The rally defied sluggish downstream markets in China where the pace of demand recovery remains slow.

Platts assessed Asian paraxylene up $4/mt on the day at $1,046.67/mt CFR Taiwan/China March 18, breaching the previous year-to-date high of $1,044.67/mt Feb. 27, S&P Global Commodity Insights data showed.

Buying interest for paraxylene remains firm, with the market abuzz with robust bidding activity, a trader in Singapore said.

"Some trading companies are buying up PX [and] they are bidding it up with PTA plants," the trader said.

Several PX cargoes were heard moving to the West ahead of the US summer driving season and the expected draw in Asian aromatics for blending into gasoline, sources said.

Possibly reflecting a gradual rise in US gasoline demand, US gasoline stocks fell 5.662 million barrels on the week to a more than three-month low of 234,083 million barrels in the week ended March 8, the latest data from the US Energy Information Administration showed.

US gasoline stocks were last lower at 226,054 million barrels in the week ended Dec. 22, 2023, according to the data.

The US RBOB-Brent crack was assessed at $28.85/b at the Asian close March 18, up from the Platts-assessed $28.08/b at the Asian close March 15.

"I think the US may draw some higher octane gasoline cargoes or components from Asia moving toward the summer driving season amid reformer issues," a second Singapore based trader said.

Turnarounds ahead

PX prices were also supported by expectations of tighter supplies as refinery maintenance season draws closer, sources said.

"April is turnaround season, PX is pretty tight," a producer in Japan said.

China's Hengli will shut its three reformers starting April to carry out maintenance work, which will impact production at the plant's two PX lines.

Additionally, Japan's Eneos will also shut its Oita aromatics unit in April cutting, S&P Global previously reported.

Sluggish downstream

Despite firmer PX prices, downstream markets in China are still in a recovery mode, traders said.

Bloated PTA inventories remain a cause of concern as demand stays lukewarm, according to a broker. "[Current] demand can not digest the accumulated inventory," the broker said.

In the week ended March 15, PTA inventories in China jumped to 2.92 million mt, from 2.86 million mt the previous week, the broker added.

Polyester plant operation rates have reached 90% but consumption trends in the domestic Chinese markets are yet to grow, a polyester producer in China said.

The slump in the Chinese property markets is crimping polyester consumption more compared to demand for clothing, the producer said.

"Property market is bad [but] clothing consumption in China is still good," the producer added.

Platts PTA FOB China assessment was up $3/mt on the day at $771/mt March 18, S&P Global data showed.