China: Since the beginning of this year, the processing margin for Purified Terephthalic Acid (PTA) has been declining, and many plants in China are considering maintaining their units in Q2 of 2023. However, the average capacity utilization at refineries that make PTA decreased by 1% from the prior week. Therefore, because of the small margins and ample feedstock supply, several PTA producers are preparing for maintenance in the coming days.

Currently, the price for PTA has been reducing, with values reaching USD 816/MT Ex-Qingdao during the week ending 17th February 2023, as per the ChemAnalyst database.

Although the margin has been severely reduced as of now, the operating rate has not decreased significantly. On the one hand, some stockpiles have already been sold at high prices, so producers have no sales pressure for the time being. On the other hand, if there is an unplanned shutdown, the feedstock Paraxylene contract also needs to be negotiated.

In addition to some planned maintenance, Sanfangxiang abruptly shut down the unit; Zhongtai Chemical postponed starting its unit; INEOS and Billion marginally reduced operating rates and scheduled maintenance for Q2; and Weilian Chemical's 2.5 million tonne plant intends to shut down on 23rd February. Hence, the PTA plant's operating rate is anticipated to decline to about 73%.

Many other units, like Yizheng, with a production capacity of 650/MT, also plan to shut down for one week during end-Feb; OPSC Shanghai, with a production capacity of 750/MT, plans to keep the operating rate at 80% in Mar and will shut down for 1 month in Q2.

As a result, the analyst projects that PTA prices will decline as long as producers have enough supply. Hence, producers and traders may cut the price for PTA to increase the sales of material in order to empty the stocked inventories.