Crazy Profit Expansion Plunged In 2019, The PX Market Began To Shuffle.

After the end of the National Day holiday, Asian PX profits continued to deteriorate. By October 15th, the Asian PX profit value shrank to -38.12 US dollars / ton, a record low since March 2014. PX has been a leader in the polyester industry chain, but since the new capacity was put into operation in 2019, the profitability of PX has gone downhill after the transformation of supply and demand pattern.

In 2014, due to the outbreak of oversupply of crude oil, the collapse of oil prices led to the collapse of the cost side of PX, and the profit space was squeezed accordingly. Once it faced substantial losses, PX profit remained low for 3 years, and the profit range was mainly concentrated in the range of 60-90 us dollars / ton for 3 years.

Up to 2018, with the positive results of oil production reduction, the market boom rose significantly, and the profit margin of PX increased significantly, becoming one of the most profitable products in the polyester industry, with a profit peak of nearly US $400 / ton.

However, at the end of the first quarter of 2019, the turning point of the first quarter of the year was the turning point of PX profitability, and the large scale new capacity was put into the fuse, and the "oil refining aromatic polyester" matching mode of development greatly enhanced the pricing power of enterprises. During the year, the cash flow of polyester industry chain obviously showed downward trend. Downstream PTA processing fees were once more than 2400 yuan / ton. Recently, the cost side performance was particularly strong, while PX increased the capacity supply in the new year, greatly increased the domestic supply capacity, the supply and demand prospects were pessimistic, and the PX- naphtha oil price difference narrowed continuously.

Entering PX in October, the profit margin of PX once again broke through the cost level and deepened continuously. According to the difference between PX and naphtha 340 US dollars / ton price difference, in September 2019, the average monthly production loss of PX theory was 40.5 US dollars / ton, and the theoretical production loss in PX months was the largest in 65 months.

Translated into RMB prices, in September 2019, PX's monthly production loss was 288 yuan / ton, while in September 2018 it was 2009 yuan / ton for production profit, compared with the previous year, production profit dropped by 2297 yuan / ton.

In the 3 quarter of 2018, PX and PTA jumped sharply, and PX profits surged. With the new PX production capacity being put in succession, PX profits fell off since April 2019. If Zhejiang Petrochemical 4 million tons / year and Heng Yi Brunei 1 million 500 thousand tons / year PX new capacity is put into operation recently, the market price of PX will continue to bear pressure. It is speculated that the loss of PX theory production may be even larger.

Affected by the contraction of profit space, after the National Day holiday, news of downloading and downtime maintenance of PX enterprises has been continuously heard. From the chart above, we can see that the PX boot rate in October has plummeted, which is the lowest in the whole year.

With the completion of the 1 million ton / year PX plant of Hainan refinery and expansion in the end of September and the planned production of products in September 30th, the supply of domestic PX increased further. As of September 2019, China's new PX production capacity includes Hengli Petrochemical 4 million 500 thousand tons / year, Hongrun 600 thousand tons / year, Liaoyang Petrochemical capacity expansion 300 thousand tons / year, Hainan refining and chemical two phase 1 million tons / year total 6 million 400 thousand tons / year, compared with the end of 2018, production capacity increased by 46%.

2019 was the first year of the crazy expansion of PX in China. The 4 quarter focused on the specific date of operation of the 4 million ton / year PX plant in Zhejiang petrochemical company. If the Hainan refinery and Zhejiang petrochemical company has a normal operation of the 5 million ton / year PX plant in the 4 quarter, the import volume of PX will further decline. According to the estimated load of the two sets of 70%-80%, the output of 29-33 tons / month PX will be increased.

Xiaobian believes that as the PTA crazy expansion of the year, squeezing the import and export market share of Japan and Korea and Taiwan, the next 2-3 years after the PX crazy expansion, it will quickly seize the market share of Japan and South Korea's imported PX. In 2019, the PX market began to shuffle, the competition has just begun. (source: JOYOU information, Zhuo Chuang information)