European Paraxylene Market Faces Price Decline During November Amidst Global Market Dynamics

In a notable trend, the November 2023 contract price for Paraxylene in Europe experienced a continuous decline for the second month in a row. The price decline was majorly attributed to the weak feedstock prices and feeble downstream demand. Furthermore, the European market's prices for Paraxylene have been further pressured by low-cost import offers from the Asian market.

Primarily, the Asian market played a pivotal role in this price movement. The decrease in Paraxylene prices in Asia has had a cascading effect on European negotiations. The demand for octane components specifically blended xylenes in the gasoline blending sector, remained weak throughout the month. This weakened demand exerted downward pressure on global Paraxylene prices. Negotiations were further impacted by subdued demand from the Polyester and Packaging sectors.

Downstream markets, grappling with weak demand over several months, witnessed lower operating performance. This included the mothballing of Indorama Ventures' Purified Terephthalic Acid (PTA) plant in Sines, Portugal, and the recent proposal by INEOS Aromatics to mothball one of its PTA plants in Geel, Belgium. The reason behind the shutting down of the plant was the increasing costs of energy, raw materials, and labor in Europe, which have rendered PTA production in the region less competitive compared to Asian exports.

Simultaneously, buying sentiment remained constrained by slowing end demand as the year-end approached. Most end-users hesitated to build high stocks due to sluggish offtake rates and elevated port inventories.

Meanwhile, in the Asia-Pacific market, weak fundamentals and a rising supply of Paraxylene were the main causes of the squeeze on product prices. Even outside China, the supply of Paraxylene has expanded as a result of higher operating rates, particularly in South Korea. Several South Korean manufacturers have increased the operational rates of their Paraxylene plants. The 2.1 million MT/Year SK lines, the 1 million MT/YR SK/JX line, and the 1.8 million MT/YR S-Oil lines are all currently operating at full capacity. Additionally, GS eventually recommenced operations in late November after several delays in resuming the 550 KT/yr Paraxylene line. Therefore, with the plant's operating rate expected to reach 80%, GS is anticipated to increase shipments to China. As a result, there might be an ample supply of material in China.

As per the ChemAnalyst conclusion, the increased inventory levels have added pressure to Paraxylene discussions and weakened demand from downstream PTA industries. Also, cheap imports from the Asian market might affect negotiations in Europe.