VINACHEM

The Asian paraxylene-naphtha spread shrank to a near 18-month low on the back of weak buying interest for PX while naphtha prices remained firm, according to S&P Global Commodity Insights data and market sources.

At the Asian close Aug. 14, Asia's PX-naphtha spread stood at $287.92/mt, the lowest in 2024 so far and the lowest since Feb. 28, 2023, when it was assessed at $287.08/mt, data from Commodity Insights showed.

Weak physical demand continues to pressure prices with aromatics producers expecting a further decline in prices.

"If $280/mt cannot hold, may be next will be $250/mt. It can only go lower, as expected," a trader with a Middle East aromatics producer said.

A spread of around $300-$350/mt is deemed profitable for most producers though some producers could work with slightly lower spreads too.

The PX physical spot price also continued to slide to record lows. Platts assessed Asian paraxylene down $7/mt on the day at $970.67/mt Aug. 14, the lowest in 2024 so far and hitting an eight-month low since Dec. 14, 2023, when it was assessed at $969.17/mt.

China's sluggish downstream demand remains the top concern as polyester inventories stay high and producers resort to sales at discounted prices to clear stockpiles, sources said.

Earlier in 2024, the anticipated pull of PX and other aromatics for blending into gasoline ahead of the US summer driving season failed to live up to expectations, a trader in China said.

"PX is weak today [and] MX [price] is also weak," the trader said.

A Chinese PX producer said that curbing PX production and switching to gasoline instead is also ruled out for now.

"Cannot [slash production], cause gasoline profits drop harder," the producer said.

With blending demand offering no help, PX producers are fervently relying on China's polyester downstream demand to absorb their production, sources said.

Benzene-naphtha remains healthy

Amid ongoing downstream capacity expansions for benzene, the benzene-naphtha spread was still expected to remain healthy. At the Asian close Aug. 14, the benzene-naphtha physical spread stood at $331.92/mt.

Despite consensus of a weak macroeconomic environment in China and its impact on downstream polymer demand, benzene derivatives capacity continued to expand at a pace exceeding that of benzene in China, exacerbating the net importing countries structurally benzene short.

In addition, inventories at east China commercial storage have rebounded from its lows in June, to approximately 67,200 mt, according to estimates from market sources.

With the arbitrage to the US closed, demand from China is seen as the main factor supporting prices.

Producers in both Northeast and Southeast Asia were heard to position cargoes towards Chinese buyers amid poor downstream performance elsewhere.

Firm naphtha

Asian naphtha prices could see some support as lower inflows were heard entering Asia from the West. However, lower demand for naphtha as a cracker blendstock due to ongoing and upcoming regional cracker turnarounds could dampen overall demand, sources said.

The keenly watched flows from the west of Suez is anticipated to be lower amid a closed east-west arbitrage, potentially stretching regional supplies, several market participants said.

"I believe European demand for naphtha is high now and Asian prices will track rising western prices," an industry source said.

Meanwhile, South Korea's GS Caltex is expected to take at least one of its crackers offline over September-October, sources said.

Japan's Idemitsu cracker, which was initially shut on July 15 due to some problems, was slated to restart on Aug. 11, Commodity Insights reported previously.   – Platts –