In 2019, the price difference trend of MX-PX encountered a waterloo, causing the theoretical production profit from MX to PX to plummet from a high of 300-400 US dollars/ton to a loss of 50-100 US dollars/ton. As shown in the figure below, starting in March, the price difference between the two narrowed rapidly. From late May to July, MX-PX production profits began to hover near the cost line. After mid-to-late July, PX began to fall into a long-term loss situation.
Picture : MX-PX production profit trend
Guided by various factors such as crude oil and demand, xylene prices generally fluctuated and strengthened during the year. However, due to the rapid expansion of domestic PX production capacity, PX prices The pressure of oversupply in the market has increased, and fierce competition for supply has caused the trend to plummet.
From Dalian Hengli and Shandong Hongrun in the second quarter, to Hainan Refining and Chemical Phase II in September, and Zhejiang Petrochemical in December, the new PX production capacity during the year totaled 6.1 million tons. (Zhejiang Petrochemical has not yet started construction and is not included in the calculation). Although Hengli Petrochemical’s refining and chemical integration project theoretically does not require external mining of xylene, due to upstream supporting problems, some xylene will be externally mined in the second half of the year, resulting in a more significant supply of commodities on the market. The tightness has further pushed up the price of xylene, while also causing the price difference between xylene and paraxylene to continue to narrow.
In the future, the new production capacity of PX will still be large. As demand grows, how will the price relationship and price difference trend between MX-PX change?
Although the expansion of PX production capacity means that xylene consumption continues to grow and the demand side is strong, on the one hand, the production capacity that will be put into production in the future Most of them are integrated, and the increase in externally sourced xylene is limited. On the other hand, as PX enters a comprehensive and long-term loss stage, the marginal effect of PX’s new production capacity on the price stimulation of xylene is gradually weakening.
Due to the rapid expansion of PX production capacity resulting in excess, long-term losses and competitive pressure will suppress the decline in the operating rate of enterprises, the decline in PX operating rates will promote the growth of xylene commodity volume, xylene commodity The increase in volume will suppress prices, and the decrease in xylene prices will stimulate an increase in the start-up of PX plants. Therefore, it is difficult for the MX-PX spread to continue to narrow in the future. Instead, it will enter a cycle of expansion-narrowing-expansion while remaining relatively narrow for a long time. </p