PX is not self-sufficient

China Drying Newsletter On January 24, the long-awaited market for aromatics in Danzhou, with an annual output of 800,000 tons of paraxylene (PX) project, was suspended by the Ministry of Environmental Protection for suspected environmental violations. In the coming period, the domestic PX project will be more cautious. At the same time, the production capacity of downstream refined terephthalic acid (PTA) expanded rapidly and the domestic PX market was in tight supply. The price remained high. In the current situation where China’s PX dependence is as high as 46%, domestic supply growth will not keep up with the pace of demand growth, and South Korea and other neighboring countries will release huge amounts of capacity in the next two years. Experts predict that domestic supply will be tight. The situation will continue until 2014, but the domestic PX self-sufficiency rate is still difficult to get rid of the low.

Sharp increase in PTA productivity

As an important organic chemical raw material, PX is mainly used for the production of PTA. PTA and ethylene glycol produce polyester after esterification reaction and it is an important textile raw material.

Industry sources told reporters that the rapid development of the domestic textile industry has led to a substantial increase in the demand for chemical fiber. Especially since 2009, the domestic PTA industry has ushered in a major outbreak. Hengyi and Rongsheng have become dazzling “Gemini stars” in the expansion of PTA capacity. With the rapid expansion of PTA production capacity, China has surpassed South Korea and the United States to become the world's first. As of the end of 2011, China's PTA has a total annual production capacity of more than 20 million tons, and there are about 20 major producers with serious excess production capacity.

Despite the slowdown in the domestic economy and the slowdown in exports from the textile industry, since 2012, domestic PTA capacity expansion has not stopped. Since 2012, BP Zhuhai has an annual output of 200,000 tons, Jiaxing Petrochemical has an annual output of 1.5 million tons, and Zhejiang's Far East has an annual production capacity of 1.4 million tons. In particular, in the third quarter of 2012 textile golden season, new production capacity of PTA was accelerated and put into operation. Dalian Hengli's annual production capacity of 2.2 million tons was put into operation on October 20. Yisheng Hainan's annual production capacity of 2 million tons was also put into production in November.

With the release of new PTA capacity, the PX market gap has been further increased. Imports of domestic PX increased significantly. In the first half of 2012 alone, China's total imports of PX were 2.961 million tons, an increase of 32% year-on-year.

Domestic PX production is not optimistic

However, while PTA production capacity has soared and PX imports have increased year by year, the construction of domestic PX installations has not been optimistic. Due to various factors, the pace has been slow.

According to statistics, in addition to the centralized injection of new domestic PX projects in 2009, the growth of PX capacity in China has been slow in recent years, and the average annual growth rate of production capacity from 2010 to 2012 was only about 8%. The average annual growth rate of 15% in downstream PTA production capacity. Moreover, in 2011, there was no new capacity in the country, and the annual output of 55,000 tons of equipment in the old line in Urumqi was also shut down, resulting in a reduction in capacity. Up to now, domestic PX has an annual production capacity of 8.96 million tons, mainly concentrated in PetroChina and Sinopec, and the total capacity of private enterprises only accounts for about 30%.

According to professional sources, due to the limited supply of domestic naphtha resources, the construction of PX plants is constrained by the shortage of raw materials. PX projects are generally built with large-scale refineries, and the PX production process is very complex and requires excellent professional technology and management experience. In addition, PX is an aromatic hydrocarbon device that is sensitive to the environment and requires a high degree of supporting conditions. Therefore, the country's entry requirements for PX are quite high.

In addition, due to the increase in people’s awareness of environmental protection and the lack of adequate understanding of PX by the domestic public, PX is often demonized and resisted, causing local governments to cautiously withdraw when introducing PX projects. This is also a major cause.

According to the plan, the domestic Sichuan Petrochemical annual output of 650,000 tons, Hainan Refining and annual output of 600,000 tons and Quzhou Tenglong aromatics total annual output of 1.6 million tons of new production capacity will be put into operation by the end of this year and early next year, but Zhangzhou Dragon Project Has been stopped, production time will inevitably be postponed.

Neighboring countries will welcome production tide

Due to the slow growth of PX production capacity, the supply of domestic PX market has continued to be in short supply since 2011. The data shows that at present, China's PX has an external dependence of 46%, while imports mainly come from Japan and South Korea, especially South Korea. In 2010, the total import volume was 3.527 million tons, which rose sharply to 4.982 million tons in 2011, a year-on-year increase of 41.2%.

At the same time, due to supply shortages, countries such as Japan and South Korea continue to raise prices of PX suppliers, making PX prices in the international market high, and the profits are considerable.

"At present, the PX profit in the market is between 700 and 800 yuan per ton. When the market is good, it can even reach 1,300 yuan. The profit is very impressive. In the current environment, PX is stable and does not pay, and sometimes even becomes a petrochemical industry. The profits in the product," a market analyst revealed to reporters.

Huge profits have caused companies in Asian countries to pursue PX, especially South Korea. In April 2012, South Korea's GS Caltex announced that it will cooperate with Japan Showa Shell Oil Company and Japan Solar Oil Company to expand its PX production base in Yeosu, South Korea, and expand its annual production capacity from 1.35 million tons. To 2.35 million tons, it is expected that it will become the world's largest PX plant after the completion of expansion at the end of 2014. Not coincidentally, before this, South Korea’s Samsung Total also announced that it will invest approximately US$1.44 billion to build a new PX plant with an annual output of 1 million tons in Dashan, Korea, and the production time is expected to be in 2014.

Earlier this month, South Korea’s HC petrochemical production project with an annual output of 800,000 tons was just put into production. According to the plan, India's annual output of 900,000 tons of PX devices will also be put into operation in 2013.

Industry experts predict that after these devices are fully operational in 2013, the shortage of PX market will be greatly improved. In particular, in 2014, the industry expects that Asia will put about 6 million tons of annual production capacity into the market. By then, the situation of tight PX supply will be completely eliminated, and even excess capacity will occur.

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