PX Global Trade Flows Have Been Severely Hit. This Year, Domestic Oil Refining, PX And Ethylene Production Capacity Expansion Will Be Strictly Controlled.

In March 3rd, Fu Xiangsheng, vice president of the China Petroleum and Chemical Industry Federation (hereinafter referred to as Petro Chemical Union), revealed in the press conference of the petroleum and chemical industry in 2020 that the Federation of petroleum and chemical industry will, on the basis of in-depth investigation and research, complete the "14th Five-Year" development plan of petroleum and chemical industry in the year, and technological innovation, green development, petrochemical industry and chemical industry. New materials, modern coal chemical industry, petrochemical park and other special planning, establish the "14th Five-Year" petrochemical industry's high quality development goals, key tasks and ideas and measures, and outline the long and medium term road map to achieve the goal of petrochemical power.

At the same time, Fu Xiangsheng said that we must attach great importance to the serious excess capacity problem in the petrochemical industry. Concerns over overcapacity in China's petrochemical industry are growing, not only worrying about the surplus of bulk basic products such as nitrogen fertilizer, soda ash, caustic soda, calcium carbide and tires, but the most worrying thing at present is the overcapacity of refineries, aromatics, polyester, even olefin, organic silicon and polycarbonate. In recent years, the centralized construction and centralized operation of refinery and petrochemical units have brought about a substantial increase in capacity of PX, ethylene and polyethylene, and some products are expected to be globally saturated.

Fu Xiangsheng pointed out that the situation of oversupply in this global market has already appeared, and the phenomenon of centralization of capacity expansion in the domestic market must be highly regarded. Starting from this year, in addition to the state key bases and major projects planned for the petrochemical industry planning and layout plan of the State Council, new and expanded oil refining projects and new PX and ethylene projects will be strictly controlled and not allowed to be violated illegally. The focus of the petrochemical industry is to continue to deepen the structural reform of supply side and put more emphasis on the innovation and high quality development of the petrochemical industry. Location.

PX fell back to 08 years under the storm.

In 2008, the financial crisis led to the collapse of chemical products. Now the outbreak of the new crown pneumonia and the breakdown of crude oil production plan once again triggered panic in the market. The PX market is doomed, and the price is about to hit the lowest point in 08 years.

　　 Crude oil slump, 9 CFR Japan naphtha closed down 97.78 U.S. dollars / ton to 310.975 U.S. dollars / ton, Asian PX closed down 100 U.S. dollars / ton to 583 U.S. dollars / ton CFR Taiwan / China, the single day decline of 14.46%, the largest single day decline in history, PX prices fell back to the price of the 2008 financial crisis.

From the chart, we can see that the price of PX is at a low level for more than a decade. The lowest point is the $571 / ton CFR Taiwan / China in November 6, 2008. At present, the price of PX is only 12 US dollars / ton from the historical minimum. PX is mainly constrained by the weakening of the environment. The cost side and demand side restrict the market due to the double impact of pneumonia epidemic and poor crude oil performance.

China's external dependence is decreasing, and PX capacity adjustment is becoming a trend.

2019 is the first year of China's PX industry. With Hengli petrochemical, Zhonghua Hongrun, Hainan refining, Zhejiang Petrochemical and other large scale refinery and petrochemical plants put into operation, the capacity increased by 64% to 23 million tons. At the same time, the dependence on imports also declined from 59% to 51%, and the dependence on imports will continue to decline in 2020. At present, in the upstream and downstream capacity expansion and high load operation, PTA's processing profit has gradually shrunk to a profit and loss balance in the past few years, and PX processing is actually at a loss.

　　 China dominates the future of the global PX market. The share of China's market in the global demand market has increased sharply from 32% in 2010 to 61% in 2019. IHS Markit predicts that this proportion will reach 65% by 2029. China's dependence on imported PX has also increased rapidly. In 2010, China's imports of PX accounted for 38% of its consumption, and in 2018 it had risen to 61%. However, this situation is rapidly reversing, mainly because of the large number of new PX installations in China.

In 2018 and 2019, China's annual PX production capacity increased by 4 million 900 thousand tons, mainly from Hengli Petrochemical's two new large-scale PX installations in Dalian. In the same period, China's annual PX consumption increased by only 2 million 400 thousand tons. The difference between new supply and new demand reached 2 million 500 thousand tons / year. Of course, not all new capacity can be utilized at full capacity. In 2018, the average operating rate of China's PX installations was 84% and 81% in 2019, but the domestic PX production estimate still increased by 3 million 600 thousand tons / year, replacing the import demand of over 1 million tons / year.

In 2019, the proportion of PX imports to consumption dropped to 52%. With the additional 7 million tons / year of new PX capacity put into operation this year, China's dependence on imports of PX is expected to fall to 43%. China will also add 8 million 400 thousand tons / year PX capacity before 2024, when China's dependence on imported PX will fall to 30%.

The global parylene (PX) market is entering a downward cycle under the dual impact of rapid expansion of capacity and slow growth in downstream PET and polyester market demand. IHS Markit said that with the narrowing or negative production of PX production, the average operating rate of the global PX device is facing less than 80% for the first time since 2014. Recently, those high cost non integrated manufacturers will begin to close their production capacity. IHS Markit, vice president of aromatics and fiber business, Duncan Clark, said: "the radical restructuring of the global PX industry is not expected to occur in 2020 and 2021, but because the Chinese market is more closely related to self-sufficiency, for some manufacturers, the realistic option is to shut down production capacity."

At present, the operating rate of global PX devices has dropped from 88% in 2018 to 83% in 2019. Influenced by China's large capacity and new capacity in other regions, IHS Markit predicts that the global PX plant operating rate will further decline to 75% in 2020, and will rebound to 77% in 2021.

Under the integration of refining and chemical industry, the main PX exporting countries will face more brutal competition.

In recent years, several major private chemical fiber giants in China have been working hard to speed up the construction of an integrated refining and chemical project. With the completion of these major projects, the last link of China's petrochemical polyester and chemical fiber industry chain will be completely opened up. But in the post refining era, the PX industry is also a crisis. In 2019, China's PX average production capacity increased by 4 million 100 thousand tons, output increased by 3 million 400 thousand tons, and demand increased by 2 million 700 thousand tons. As the 4 million tons of zhe petrochemical plant was put into operation in late 2019 and early 2020, significant increase in effective capacity was achieved. In addition, the Dongying Quanzhou chemical and SINOCHEM Quanzhou, which was planned to go into operation at the end of the year, is expected to increase by more than 710 million tons in average.

Taking into account the irreparable loss of consumption caused by the epidemic in the first quarter, the annual downstream demand increment is estimated at 150-200 tons, and import demand shrinks to 1150-1200 million tons. The volume of external purchases this year may be further reduced by 300-350 tons on the basis of last year. The Brunei Hengyi Petrochemical 1 million 500 thousand ton plant, which was put into operation at the end of last year, will fully supply the country this year, and will further occupy the market share of other countries. In addition to China, the PX carrying capacity of other countries is relatively limited. It is more difficult to transfer excess capacity to downstream and third countries. The main PX exporting countries will face more brutal competition.