PX in stalemate due to low margins against supply increase

The fluctuation range of PX price has become narrower since Aug, except for in the period after the strike on Saudi Arabia’s oil facility when PX price was volatile. The gap between buying and selling intentions has become more obviously, and the discussing sentiment more tepid with no deal heard for five consecutive trading days.

The market is in a stalemate. On the one hand, PX margins have been squeezed, which lends support, while on the other hand, PX supply is expected to increase, which brings pressure.

The spread of PX to feedstock has been reducing since this March. PX-MX spread, in particular, narrowed to below $100/mt, which was generally considered as the breakeven line, in the second half of July, and producers dependent on procured MX suffered pains. Some plants in China and South Korea started to shut down or cut operating rates. In Sep, PX-naphtha spread dropped to hit $300/mt, which was generally considered as the breakeven line. The poor economics have curbed the motivation of producers in PX production.