With the normalcy In Crude Oil price, Paraxylene market may ease further

Paraxylene price dipped on the week ending 8th April, backed by decreasing Crude oil prices and reduced market sentiments amidst the extension of the lockdown in the Chinese cities. WTI crude oil fell by 1% on 8TH April causing the imported price of Paraxylene from South Korea to decrease and settle at USD 1061 per MT. In contrast, the domestic price of Paraxylene in China showed stability this week and assessed at USD 1460 per MT.

Paraxylene derived from petroleum and coal tar by catalytic reforming of naphtha has shown a decline in its price trend with smoothening of crude oil prices after the release of crude oil from strategic stocks, which may improve the supply dynamic in the market.

China, being the major importer of crude oil, has been observing a decline in crude oil demand due to the current influence of domestic public health events. The city of Shanghai has extended its lockdown along with another round of mass Covid testing, with the whole 25 million population being tested. In addition, the restriction in logistics and transportation has curbed the supply dynamics along with the reduced activities on several ports hindering shipping of the product in the domestic and international market. Therefore, the price trend of Paraxylene can be seen weak along with deterred market sentiments.

The OPEC+ nations have concluded to not increase the production rate of 4 lakh barrels per day as their daily target in order to restore supply cuts in the international market. Also, smoothening in the crude oil supply after the news of release of the strategic stocks of US and IEA by 2,000,000 barrels per day for the next two months has eased the pressure over the downstream derivative market. Furthermore, crude oil supply from the Middle east region is expected to remain undisrupted as there is no expectation of conflict in the middle east during Ramadan. Thus, the price for Paraxylene fell by 4% and rested at USD 1164 on April 8th, 2022.

According to ChemAnalyst analysis, “Paraxylene prices are expected to remain weak in the coming weeks owing to ease in crude oil prices due to increase in supply fundamentals as IEA and others have released strategic reserves. Furthermore, the resurgence in covid cases has worsened demand-supply dynamics in China hindering logistics and transportation of commodities.”