PX demand to take a hit as downstream inventories build

Demand for paraxylene (PX) is likely to take a hit over the next few weeks as inventories build at downstream purified terephthalic acid (PTA) plants that are starting to cut or shut down production.

PTA producers are facing difficulties making deliveries to consumers because of a lack of truck drivers and road closures amid the escalating coronavirus outbreak, which is putting a strain on logistics.

Chinese producer Jiangyin Hanbang shut down its No.1 600,000 t/yr PTA unit in east China's Jiangsu province early last week. Fellow producers Chongqing Pengwei and Fujian Fuhua have reduced operating rates at their 900,000 t/yr unit in Chongqing and 4.5mn t/yr plant in Gulei to 60pc and 70pc, respectively, to prevent a further build-up of PTA inventories.

Other PTA producers are considering cutting back on production rates for the same reason, amid uncertainty over when deliveries will resume and downstream polyester plants will increase operating rates. Polyester plants are also finding it difficult to restart operations because of a labour shortage and logistical constraints.

Deliveries of imported PX remain smooth so far and vessels are still able to regularly discharge shipments, market participants said. But some PTA producers have initiated discussions with suppliers to delay PX shipments in anticipation of production cuts and shutdowns.

By Suzi Shin