Asia’s PX-Naphtha Spread Widens 10.7% on Month Amid Firm PX Demand
Asia’s paraxylene-naphtha spread, which measures the profitability of converting feedstock naphtha to PX, rose 10.7% month on month in September to $343.93 per metric ton, its highest level since January, according to OPIS data. This reflected strong downstream demand as Chinese purified terephthalic acid facilities resumed operations ahead of the peak winter textile season.
This widening spread pushes processing margins comfortably past the industry’s typical breakeven threshold of over $300/mt, suggesting an improved recovery in production economics across the broader regional polyester chain.
Heavy Chinese plant turnarounds in the second and third quarters tightened domestic PX supply, removing a combined 3.57 million mt of capacity from the market. According to Chemical Market Analytics by OPIS, regional production losses reached an estimated 1.293 million mt in Q2 before escalating to 2.279 million mt in Q3.
Key facilities taken offline during second-quarter turnarounds included Dongying Weilian Chemical’s two plants in Shandong, each with a capacity of 980,000 mt/year; Fujian Fuhaichuang’s two plants in Zhangzhou, each with a capacity of 800,000 mt/year; and Ningbo Zhongjin Petrochemical’s 1.6 million mt/year facility in Ningbo. All these plants were subsequently restarted between August and September.
Trading activity on the open platform for September arrival cargoes into China had also fallen by 23.5% month on month, standing at 13 deals compared to 17 deals in August, according to industry sources.
Although Chinese PX imports rose 15.3% month on month in August to 591,244 mt, the volume plummeted 32.5% year on year from 875,952 mt, according to customs data. The sharp contraction in import flows, coupled with tight domestic production, exacerbated local market tightness, causing a severe supply squeeze in Q3.
As a result, average spot PX prices jumped 13.1% month on month in September to $1,247.10/mt CFR China, according to OPIS data. The market drew further support from a firming upstream energy complex, whose upward pressure filtered down into the petrochemical chain to reinforce Chinese PX imported price gains.
Upstream energy markets provided additional cost-push support, with front-month Intercontinental Exchange Brent crude futures rising 15.8% month on month in September to average $102.01/bbl, ICE data shows. The strong rally in crude prices, combined with tight Chinese supply fundamentals, underpinned the increase in spot PX values and drove a significant widening of the PX-naphtha spread over the month.
—Reporting by Serena Seng, serena.seng@dowjones.com; Editing by Mei-Hwen Wong, mei-hwen.wong@dowjones.com