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Insight | Time:Nov 17 2017 9:28AM
PX needs to be destocked to make a leap
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Speculation on PX cost-side has become cautious since entering Nov. Crude oil will dip and not promote PX market in short run albeit no signs of downward trend, while firm PTA boosts PX price to inch up. However, PX-naphtha spread still stays at $300/mt or a bit higher due to imbalance of PX supply and demand.

On the one hand, strong downstream performance is in complete accordance with the fundamentals and the surge of PTA futures, especially Jan’18 contracts, also tallies with PX supply and demand balance sheet. Some large players’ attitude is determined by the balance sheet.

Currently PFY inventory stayed at low level, a bit higher than 2016.

PTA inventory also hits historical low, brought by delayed restart of PTA units.

In addition to the low inventory, profits also perform well. Therefore, it is reasonable that PTA price increases to widen PTA-PX spread.

On the other hand, PX supply and demand balance sheet needs to revise. PTA units start up much more slowly than expected.

As a result, PX-naphtha spread will not widen in short run.

All in all, for the mixed PX market, most market players may rely on supply and demand balance sheet. So PX needs to be destocked to make a leap.
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