China PTA supply may tighten on scheduled turnarounds
China’s purified terephthalic acid (PTA) supply may tighten in October due to scheduled turnarounds, while some producers may also consider shutting down operations due to poor markets.
Hengli Petrochemical, the country’s second-biggest PTA producer, has a scheduled two-week turnaround at its 2.2m tonne/year No 1 PTA plant at Dalian in Liaoning province in the first half of October.
Another local producer, Jiangsu Honggang Petrochemical, is scheduled to shut its 1.5m tonne/year plant for around two weeks from mid-October.
Supply loss from these shutdowns is estimated at around 150,000 tonnes for October.
Market players are concerned that other producers might opt to carry out maintenance at their plants amid continued softness in PTA prices.
PTA production margins are currently low given firm prices of feedstock paraxylene (PX).
Sellers of PX were not keen to reduce prices as they had been incurring losses due to previous strong prices of feedstock naphtha and mixed xylenes.
Meanwhile, China will be welcoming two new PTA plants in the next two months, namely Xin Fengming Group’s 2.2m tonne/year unit and Xinjiang Zhongtai Chemical’s 1.2m tonne/year plant.
These start-ups, however, are not expected to have a real impact on overall supply until end-October.
In September, supply lengthened in the Chinese market as PTA major Fuhaichuang Petrochemical raised production at its plants to around 90% of capacity, while Hengli Petrochemical kept running its No 1 plant, postponing the turnaround initially scheduled this month. Against a backdrop of weak demand, long supply has led to a gradual build-up in inventories.
A number of downstream weaving factories may shut down during China’s week-long National Day celebration on 1-7 October as huge orders have been limited despite peak demand season.
In the week ended 20 September, spot domestic PTA prices in east China had swung up and down by more than 5% before closing at Chinese yuan (CNY) 5,072.5/tonne ex-warehous (EXWH) – the lowest since January 2018, according to ICIS data.
The initial spike of 5.5% over a two-day period to 17 September due to a surge crude futures after the attacks on Saudi Arabian refineries, was nearly wiped out in the second half of the week as upstream prices weakened.
Buying appetite for spot September PTA cargoes remained limited as most participants adopted a cautious stance on the market and were purchasing cargoes on a need-to-basis.