Divergent Trends in Supply and Demand Send Ripples Across Paraxylene Market

In the European xylenes market, the week ending April 5, 2024, brought mixed signals regarding the availability of Paraxylene alongside consistent demand. The prices remained silent during the week at USD 1175/MT. Participants in the market expressed diverse views on spot availability, with some noting limited Asian imports and uncertainty lingering over potential production disruptions. Despite robust demand observed in the petrochemical and gasoline blending sectors, a bearish sentiment has permeated the market. This shift can be attributed to the increased supply of Naphtha in Europe, facilitated by arbitrage opportunities between the US Gulf Coast and the Arab Gulf, which have consequently exerted downward pressure on prices. Market participants have presented varying perspectives on spot availability, highlighting limited imports from Asia and lingering uncertainties regarding potential production hiccups. Nevertheless, customers have demonstrated a willingness to pay premiums for access to materials, although there have been observations of a slight softening in demand compared to previous periods. The availability in the Paraxylene spot market has been impacted by unconfirmed reports of production issues and constrained imports from Asia. However, overall availability has remained relatively steady, with no significant shifts reported in the supply and demand dynamics by market participants.

The downstream demand from the Paraxylene market have continued to influence overall demand in Asian market, underscoring the ongoing market dynamics propelled by downstream requirements. In Asian markets, Paraxylene saw an uptick in Korea and China during the week ending April 5, attributed to higher prices in both upstream and downstream markets. The increase in ICE June Brent crude oil futures in Asian trade has led to a rise in Paraxylene prices. Domestic Paraxylene prices in China continued to climb, buoyed by reports of improved regional Gasoline demand. Asian paraxylene and purified terephthalic acid prices also experienced upward movements. The benchmark PTA futures contract on China's Zhengzhou Commodity Exchange saw an increase.

The significance of the US gasoline blending market is emphasized, expected to draw Paraxylene cargoes and keep Asian Paraxylene prices elevated, at least until the end of April. As per the sources, importance of monitoring the US gasoline market monthly to gauge demand trends, anticipating blending demand to impact Asian Paraxylene prices. Polyester sales in the Chinese market over the last week were robust, with sales surpassing figures from almost all of March.

According to ChemAnalyst, there's an anticipation of an upward trend in Paraxylene prices driven by sustained high demand. Additionally, the prices of upstream Naphtha are expected to rise in the coming weeks, potentially further boosting paraxylene prices. The looming spectre of increased crude oil prices due to tensions surrounding the Israel-Iran conflict is also a factor contributing to market apprehension, which could consequently lead to higher prices for Paraxylene.