Sun Xueli, Deputy Manager from Sinopec Chemical Commercial Holding Company Limited (East China Company) delivers his report of PX boom cycle further strengthens with the slowdown of expansion cycle

Mr. Sun's report is divided into the following three parts.

The development of global PX capacity. Asian PX capacity expanded rapidly in 2010-2014, and China PX capacity increased intensively in 2019-2023. China PX capacity growth has accelerated since 2019, supported by domestic consumption. High dependence on PX imports is the driving force to domestic capacity expansion. However, the profits are squeezed due to increasing capacity. In recent years, bolstered by gasoline blending demand, pickup the market as well as supportive supply and demand, PX-naphtha spread widens.

PX-PTA-polyester industry chain. China PX and PTA capacity is large, but still not enough to reach self-sufficiency, and it relies on PX imports to fill the gap. China's PX imports mainly come from Northeast Asia, Southeast Asia, South Asia and Middle East. After the de-capacity cycle, China PTA capacity has been expanding again. China's PTA exports have exceeded imports since 2017. Demand for polyester is also increasing. Though the capacity expands intensively, the profit in the industry concentrate in the upstream sector.

PX futures on Zhengzhou Commodity Exchange. The pricing power of PX in Asian market is weakening, and it is now shifting to Chinese market, bringing more opportunities to PX market. In end-2023, downstream plants cut operating rate, and therefore the profits moved from PX to downstream sectors, however, with PTA capacity continuing increasing in 2024, PTA processing spread is expected to consolidate and the competition in the market could intensify.