The Direction Of PX Pattern In The Future Will Be The Longitudinal Coverage Of The Whole Chain, And The Expansion Of Capacity Will Drive The Global Trade Flow To Change.

P-xylene, as one of the highly imported products, causes billions of dollars of foreign exchange outflow in China every year. Therefore, the state will officially raise the PX self sufficiency rate on the agenda. In the next 3-5 years, the PX industry will be greatly expanded. The expected new capacity will reach 40 million tons. The supply and demand pattern will officially open up a new prospect.

"13th Five-Year" Dongfeng PX ushered in the golden period of development

In 2018, China's PX imports amounted to 15 million 905 thousand and 100 tons, apparent consumption was 26 million 133 thousand and 400 tons, and import dependence broke through the historical high to 60.86%. In order to change the unfavorable situation that PX supply in short supply and rely heavily on imports in China for many years, PX was used as the focus product in key development industries in China's "13th Five-Year plan", and the PX enterprise layout plan was clearly developed.

Table 1 plan for self sufficiency rate and import dependency of some products in 13th Five-Year

In the 13th Five-Year plan, we formulated the strategic goal of "raising the PX self-sufficiency rate to 65-70%" by 2020. In response to the call of the state, in the next 5 years, the total capacity of PX in Asia will total 42 million 200 thousand tons, of which China's PX accounts for more than 90%, and the overall situation is showing blowout growth. In the vigorous development of local PX enterprises in China, the downstream PTA private enterprises will become the first army to form a "raw material, finished product, downstream" integrated production chain structure.

Table 22019 China PX capacity plan

At present, the highest concern on the market is Hengli Petrochemical's new projects. One is because it is the first large-scale private refinery project to be put into operation in recent years, and the two is because of its single production capacity of 2 million 250 thousand tons. At present, it plans to get through the whole process in March 20th, and achieve mass production in April. The oil product has entered the sales stage, and has purchased enough MX for the development of the PX trial run in the late PX. In addition, Zhonghua Hongrun 800 thousand tons / year PX plant has been completed, but its approval procedures and production, sales and other related work will take some time, while Hengyi petrochemical, Dongying Union and Zhejiang Petrochemical are still in the construction stage. PX production is expected to reach 16 million 136 thousand and 400 tons in 2019, with an average annual growth rate of 53.57%.

Changing the supply and demand pattern in the context of PX speed increase

From 2019 onwards, the development of para xylene in China will be upgraded to a new stage, so as to get rid of the passive situation of high import dependence as soon as possible. If the new projects are carried out as planned, China's PX will rise rapidly in the next 2019-2021 years and compete fiercely with the import sources. By 2022, the overcapacity of PX will gradually begin to appear. At the same time, the industry will enter the period of survival of the fittest. Therefore, the annual average load of PX will probably show a downward trend, and the installation idle rate will also increase.

In terms of downstream demand, in recent years, China's PTA production pattern has become one of the main purposes to extend the development of the deep industry chain. In the 2019-2023 year, China's PTA expansion enterprises are mostly polyester enterprises and the existing PX enterprises to improve the industrial chain, or pursue the scale effect, enhance the comprehensive competitiveness and the ability to resist wind risks. In the future, China's PTA will hardly see a single enterprise with 1 million tons / year of the following small capacity installations, and will continue to show the dominant position of private enterprises.

It is worth noting that due to the new technological innovation of P8 capacity, the cost advantage is overwhelming. Especially after the centralized launch, PTA will enter the next round of competition. This will eliminate a part of the existing backward production capacity, such as below 1 million tons. At present, the new capacity of the East China's new capacity is only 2 million 200 thousand metric tons per year, and the rest are in the planning stage. The overall surge in demand for PX is concentrated in 2020, followed by a gradual slowdown.

The 2018-2022 year will be the golden age for the rapid development of PX industry. China will gradually realize its strategic goal of self-sufficiency. It is estimated that by 2023, China's PX production capacity will reach 56 million 130 thousand tons / year, and PTA production capacity will reach 78 million 790 thousand tons / year. Over the next 5 years, the rapid rise of PX's domestic enterprises will gradually increase the market saturation, and as the new capacity of PX has been put into operation, the supply of PX will not meet the demand. The profit margins of production enterprises will continue to squeeze, and small enterprises with backward equipment and lack of regional advantages will gradually withdraw from the stage of history and further promote industrial concentration.

China's PX capacity expansion drives global trade flows

With regard to the import market structure, along with the substantial improvement of PX self supporting capability in China, especially the new PX projects such as Hengli petrochemical and Zhejiang Petrochemical Company, there will be a matching downstream, which will obviously reduce the dependence of the enterprise on the import source. However, in view of the huge demand base of PTA in China, considering the time and actual operation of the plant, it is impossible to achieve self-sufficiency in 1-2 years. South Korea, Japan and some Middle East regions will seize the Chinese market share as much as possible and maximize their profitability by virtue of their geographical advantages and cost advantages. Therefore, when the import volume obviously shrinks, in order to ensure market stability and actual demand, in the short term, we need to import about 80-100 tons of PX supply per month.

But in the medium and long term, the pressure drop in the import PX market is constantly increasing. With the aggravation of the excess pattern in Northeast Asia, the PX price war is bound to come. In order to protect the healthy development of our local enterprises, we can not exclude the possibility of anti-dumping against imported goods. Therefore, enterprises such as Japan and Korea need to find new output points. First, with the south-east shift of textile and clothing as an opportunity, the demand for Southeast Asia and the Middle East will increase, so it will be the best place to export. The two is to seek new market opportunities in the central and Eastern Europe and South America, where the gap between supply and demand remains.

The future direction of China's PX pattern - full chain longitudinal coverage

In the domestic market, the traditional single link competition will gradually shift to the comprehensive competition of the industrial chain. Such as Sinopec, Yisheng, Hengli and other enterprises will become the leading enterprises in the polyester industry chain. The development of such enterprises has the following advantages, first of all, the competition pressure will be increased in the future. Especially in the Middle East and other rich oil producing areas, the advantage of resource utilization is to continuously expand the capacity and make the main export. The cost advantage is particularly important. Secondly, in the competition of market pricing power, the market pressure of the Bohai rim region, which is adjacent to South Korea, should not be underestimated. The upstream and downstream integration companies show the advantages of the right to speak of the market, and the expansion of the internal driving device and the increase of independent technological innovation.

In the future, a large number of new PX projects will expand and the growth rate of downstream PTA capacity will not be balanced. Therefore, after the initial meeting of self-sufficiency strategic objectives, the surplus pattern will also gradually appear. Therefore, the competition between domestic and foreign xylene enterprises will be upgraded, so as to constantly optimize the layout of the natural industry. Asian PX will enter the track of mature chemical products development. After 2 years or so, it will gradually enter the mature stage after the survival of the fittest.