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Insight | Time:Jul 2 2018 1:34PM
Demand for blendstocks subdued by increasing reforming units
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With the startups of China’s domestic reforming units, demand for blendstocks like mixed aromatics, toluene and mixed xylenes has been decreasing in 2018. Merchant supply volume of these products drops notably in China.

Beside from Sinopec Maoming who has put its new reformer in operation and PetroChina Renqiu with a new reformer to be on stream, several independent refineries in Shandong Province also have schedules to start new reforming units in 2018.

Company Reforming capacity (kta) Startup date
Huaxing Petrochemical 1000 Jan, 2018
Zhenghe Petrochemical 1000 Jan, 2018
Chambroad Petrochemical 1000 Mar, 2018
Luqing Petrochemical 500 May, 2018
Xintai Petrochemical 1000 Q3, 2018
Kenli Petrochemical 1000 Q3, 2018
Shengxing Petrochemical 1000 Q3, 2018
Total 6500  

Demand for gasoline blending is impacted, as output of gasoline of high octane number increases with new reforming units starting.

1. Mixed aromatics
China imported 2.69 million tons of mixed aromatics (the majority of imports under HS Code 27075000 are mixed aromatics) in Jan-May 2018, down a whopping 46% or 2.32 million tons year-on-year from 5.01 million tons in the same period of 2017. The imports may decrease further in the second half of 2018 and in 2019. Looking still further ahead, China may stop importing mixed aromatics.

2. Toluene
China’s toluene imports dropped 45% year-on-year to 120kt in the first five months of 2018. The volume of imports is expected to decrease further in 2018-2019, and the country may not need to import toluene further forward.

The proportion of domestic source in East China stocks is getting higher. In addition, the size of demand for toluene (including that from downstream derivatives) in China is the biggest one globally. Therefore, toluene price in East China may play a more important role in global market.

3. Mixed xylenes
Demand for imported mixed xylenes is supported by downstream PX. The volume of imports reached 260kt in the first five months of 2018, up 60kt on annual basis, which was boosted by good PX-MX spread.

The imports of MX will continue to play an important role in China, as several standalone PX plants need to import MX or purchase feedstock from domestic market. However, MX imports may also get impacted in the future.

In a conclusion, opportunities for mixed aromatics, toluene and MX as blendstocks will decrease with new reforming units coming on stream. In near term, imports of MX will be immune from the impact; and in the longer run, trading volume of toluene may get supported from its downstream derivatives.
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