China's Px Market In The Next 5 Years

Market News

China's Px Market In The Next 5 Years

Asian PX prices experienced limited fluctuation in the past months, no sharper than that of PX-naphtha spread. In face of such plain market, some players move eyes onto PX market prospect in the coming years. What is PX market like in five years? The answer is still localisation, though schedules may not totally come true. Around 2019-2020, PX capacity expansion in China is likely to reach a peak.

Compared with that in 2015, PX capacity in China is probably to double by 2021. In terms of imports, by 2021, China's PX import dependence may decline to around 25%. This means in five years, PX capacity in China would hike from current 14.4 million tons per annual to around 28 million tons per annual. If production reaches this level, the market shares of imported materials will be almost eclipsed. In China, PX capacity has been growing slowly while the public consensus is usually on the opposite of PX projects. In this circumstance, fast capacity expansion of PX is attributed to the opening of refining industry to private companies which are usually far more efficient than state-owned companies. Even excluding the probably unaccountable schedules, there are over 10 million tons per annual of schedules around 2019-2021, including a 4 million tons per annual project which will be the largest one in the world.

If the schedules all commence, localisation of PX will basically be complete in five years. At that time, the system that USD PX spot price dominates the market pricing will exit while imported materials will nearly retreat. Most domestic large PTA plants will have sufficient PX supply. Besides, fast capacity expansion will lead to additionally unforeseeable consequences and new market models.