Because PX is basically sold in the form of a contract formula, the achievement of ACP prices has a huge impact on the PX industry. However, the probability of achieving ACP this year is low. What is the reason for the significant decrease in the achievement rate this year?
The full name of ACP in English is “Asiancontractprice”, which is the Asian contract price. Since the domestic supply of PX exceeds the demand, there is no domestic PX In the PX market, the dependence on PX imports has remained between 50% and 60% all year round, which has led to the situation of foreign PX manufacturers directly supplying downstream PTA factories in the form of contract goods.
It is the main benchmark for PX prices in Asia. Its main form is that the buyer and seller sign an annual long-term contract, but the actual execution price is negotiated monthly. At the end of the month, the supplier – Japan JX, Japan Idemitsu , Exxon Mobil, South Korea’s S-oil, and South Korea’s SKG respectively announced their recommended prices for next month. The buyers include BP, Taiwan’s Capco, Yadong Petrochemical, Japan’s Mitsui Chemicals and Mitsubishi Chemical, and Jiangsu Shenghong (joined in 2017) , China Yisheng Petrochemical, the buyer made a counteroffer, and the last two or more pairs of ACP prices reached an agreement, that is, the ACP was announced. The price was calculated according to the formula, that is, 50% ACP + 50% CFR Taiwan monthly average price + α.
Before 2013, both the PX market and its downstream PTA market were in a tight supply situation, and the overall profits were relatively good. When both sides were making money, lock in Partial cost and stable income have become the mainstream ideas of both parties. Therefore, the PX price is dominated by the ACP contract price, and the probability of achieving the ACP is above 95%. After 2013, especially since 2014, with the rapid expansion of production capacity, the situation of tight supply in the PX and PTA industries quickly changed to loose supply. Buyers and sellers had great differences on the market, and the probability of reaching an agreement gradually decreased.
2019 is the first year for the integrated refining and chemical production in my country. Hengli Petrochemical has 4.5 million tons/year, Liaoyang Petrochemical has 300,000 tons/year (capacity expansion), and Hongrun Petrochemical has 600,000 tons/year and Hainan Refining’s 1 million tons/year, a total of 6.4 million tons/year new PX production capacity will be put into operation. Zhejiang Petrochemical’s 2 million tons/year PX will most likely be discharged around mid-December. If Zhejiang Petrochemical’s PX is successfully put into production, then This year, my country’s PX production capacity increased by 8.4 million tons/year (+60.3%) compared with last year. In addition, after the launch of Hengyi Brunei’s new 1.5 million tons/year PX production capacity, the PX produced will be directly shipped to the country, which is equivalent to increasing the domestic PX supply in disguise.
Taken together, my country’s new PX production capacity in 2019 actually increased by 8.4 million tons/year (domestic) +1.5 million tons/year (Brunei), the domestic PX supply side has exploded, squeezing the market share of imported PX sources from Japan and South Korea, and the quantity of PX imported into my country has begun to decline. From January to October 2019, China’s PX import volume was 12.474 million tons, a decrease of 545,000 tons (-4.2%) compared with the same period last year. It is estimated that the annual import volume is about 14.6 million tons. Since 2007, China’s annual PX import volume has been higher than that of the previous year. First drop…
According to statistics, there are 13 new, renovated and expanded PX projects in China from 2019 to 2022, involving new The PX production capacity is 32.8 million tons/year, and there are another 6 proposed projects totaling 7 million tons/year. There is no timetable for PX to be put into production.
my country’s PX will continue to expand its capacity crazily from 2020 to 2021. PX supply exceeds demand. PX is likely to repeat the old path of PTA’s crazy capacity expansion from 2012 to 2014. It is predicted that 2021-2022 my country’s PX imports will drop to less than 1 million tons, just like PTA’s external dependence of less than 2% in recent years. In the future, factories with industrial chain supporting equipment will have obvious cost competitiveness. Currently, the main importing countries of PX in my country are South Korea and Japan. It is speculated that a large number of old and small Japanese and Korean PX factories will be eliminated by the market, just like the crazy capacity expansion of mainland PTA. Some older devices in Japan, South Korea and Taiwan have been permanently shut down.
PX device will be put into production before the first quarter of 2020
The number of negotiations reached only three times in 2019 was the lowest number in the past four years. Under the premise of the poor macro environment and the crazy expansion of PX, PX buyers have no intention of accepting it. PX offers a high price, but the PX seller who has lost production unilaterally insists on a higher offer. The price differences between the buyer and the seller are large, and the possibility of negotiation is getting lower and lower. The editor believes that with the crazy expansion of domestic PX in the next three years and the expectation of oversupply, the significance of the existence of PX ACP will become increasingly diluted, and the market may eliminate this pricing mechanism in the future.
On the other hand, without the support of Chinese demand, the profits of PX manufacturers such as Japan’s JXTG Energy Co., Ltd. and South Korea’s Lotte Chemical will further decline. At the same time, the sharp surge in China’s production capacity may force major export companies in Japan and South Korea to reduce production as early as the second quarter of 2020.
Japan’s JXTG Energy Co., Ltd. stated that the deterioration of the PX market situation led to a shrinking of profits in the first quarter, but it is still optimistic about the growth of PX demand in Asia and plans to shift some PX exports to the Americas. The company’s senior vice president said after announcing that the company’s quarterly profit fell by 88%, “Due to the decline in PX profits, Japan’s Nomura Holdings lowered its profit expectations for the company’s fiscal year 2021.
Consultation”We will see many Asian export companies significantly reduce the operating rate levels of PX units, closing down operations in areas with lower combined refining and aromatics margins,” said Daryl Xu, chief analyst of Asia chemicals at consulting firm Wood Mackenzie. Or the possibility of integrating production capacity will also increase.”
JLC Consulting analysts said that China may add another 14 million tons/year of PX production capacity from 2020 to 2023, which will help increase gasoline supply in Asia. Since aromatic chemicals such as PX can be used to increase the octane number of gasoline, PX producers in South Korea and Japan may switch to gasoline blending component oils to cope with the increasing supply of PX from China. Wood Mackenzie said this could allow Asia to add 150,000 barrels per day of gasoline by 2021.
Darryl Xu said, “Japanese and Korean PX exporters will soon be faced with the dilemma of continuing to compete for the shrinking export market or shifting aromatic feedstocks to scale A much larger gasoline market?”</p
