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Affected by the global ravages of the new crown pneumonia epidemic, the slump in crude oil prices and the global economic recession, the global chemical industry in 2020 has experienced unprecedented heavy losses, and the entire petrochemical value chain has not been spared
.
Platts recently reported that with a large number of new capacity additions in China in the first half of 2021, it is expected that the purified terephthalic acid (PTA) market in Asia will experience an oversupply
.
China's production capacity expands
China's production capacity expandsMarket analysts predict that in the first half of 2021, a total of 7.
9 million tons/year of new PTA production capacity will be put into operation in China, including Fujian Baihong Group's 2.
5 million tons/year PTA plant in Quanzhou, and Shenghong Petrochemical's 2.
4 million tons/year in Lianyungang, Jiangsu.
The annual PTA unit and Yisheng Petrochemical's 3 million tons/year PTA unit in Ningbo, Zhejiang Province
.
However, industry insiders expect that the overall operating rate of PTA plants in China will decline in 2021 after the new capacity is put into operation, as the growth of downstream polyester fiber demand lags behind the expansion of PTA capacity
.
According to data from S&P Global Platts, from September to early December 2020, the average price difference between PTA and raw material paraxylene in US dollars in the Asian market was US$77/ton, and the average price difference between PTA spot and raw material paraxylene in China’s domestic market was RMB 523/ton, down 13%~16% from the first half of 2020
.
Although market players have discussed the export potential of China's PTA after massive capacity expansion, China's PTA exports are expected in 2021 due to logistical challenges, high freight costs compared to other Northeast Asian exporters, and lack of new import markets There will be no significant growth
.
Northeast Asian producers seek other ways
Northeast Asian producers seek other waysAs China's domestic PTA capacity increases, Korean PTA exporters will continue to target the European and Turkish markets, taking full advantage of the free trade agreement
.
In addition, producers in other parts of Northeast Asia, which have supplied large quantities of PTA to mainland China in the past, are also actively exploring other markets such as Vietnam and India
.
India is partially dependent on imports
India is partially dependent on importsMarket sources said that in the first half of 2021, India's domestic PTA market may tighten, leading to increased imports
.
India is the second largest PTA market in Asia.
According to Indian customs data, before the outbreak, India usually imported 50,000 to 60,000 tons of PTA per month
.
Affected by planned and unplanned shutdowns of domestic PTA production units, the Indian PTA market has been facing domestic supply shortages since mid-September 2020
.
At the same time, some PTA producers in India began to enter the downstream business in August, increasing the supply of PTA to newly acquired polyester production facilities, reducing some market supply
.
The current tight supply in India's domestic PTA market is likely to continue into 2021, as there are no new domestic PTA capacity commissioning plans in 2021
.
Therefore, traders expect greater import demand for PTA from India in the first half of 2021, but uncertainties such as possible stricter import controls, tight supply in the container market and the epidemic remain
.
The Bureau of Standards of India is expected to implement stricter quality control on PTA imports in 2021, after the scheduled December 2020 timeline for stricter quality control on PTA imports was delayed due to the outbreak
.
This may cause temporary supply problems
.
Freight costs are expected to remain high until February or even longer, before eventually returning to normal, the sources said
.
Compared with normal levels, the current freight costs have increased by nearly 3 to 4 times
.
The surge in freight rates has pushed the spread between PTA CFR India and CFR China to $117/t, the highest since Platts began assessing the spread between PTA CFR India and CFR China in November 2008
.
Platts data from 2018 to early 2020 shows that spreads are typically below $30/ton
.
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