Huge Shortfall in China’s PX Output Needs to Be Narrowed

By Hu Shiming, China National Chemical Information Center

Paraxylene (PX) is one of the important aromatic hydrocarbons. Its main application is in making PTA and DMT. The consumption of PX in DMT production has gradually declined in recent years. Consumption is now concentrated in PTA production. PTA is an important large-volume organic chemical raw material. Its major application is in the production of PET. Small amounts are also used to produce PBT and PTT.

Domestic output remained unchanged

Pushed by the rapid development of the polyester and PTA sectors, the demand for PX is increasing constantly. The PX that is available from the extraction and separation of reformed oil and cracked gasoline falls far short of today’s demand. Methods such as toluene disproportionation and transalkylation are therefore mostly used in commercial production of xylene, then xylene is transformed to PX through C8 isomerization.
At the end of 2013 the total capacity for PX was 11.108 million t/a in China. The PX capacity added in 2013 included 1.60 million t/a of Tenglong Aromatics (Zhangzhou) Co., Ltd. (wet commissioning in August), 600 kt/a of Sinopec Hainan Refining & Chemical Co., Ltd. (wet commissioning in December) and an expansion from 700 kt/a to 770 kt/a by Sinopec Fujian Refining & Chemical Co., Ltd. (shut down for overhaul in October 2013, shut down again due to malfunction soon after restarting in December). In spite of this considerable new capacity, the actual output of PX was around 7.70 million tons, basically equal to the output in the previous year, and the operating rate was only 69.3%, due to raw material supply difficulties, equipment malfunctions and maintenance shutdowns.
Other PX units that started production in China in January and February include the 1.00 million t/a unit expanded from 700 kt/a by Qingdao Lidong Chemical Co., Ltd. (overhaul and de-bottlenecking in October 2013, restart in February 2014) and the 650 kt/a unit of PetroChina Sichuan Petrochemical Co., Ltd. (start of production in February 2014). Table 1 shows the major producers of PX in China in 2014.
It should be mentioned that Sinopec Shanghai Petrochemical Co., Ltd. maintained stable full-load operation of its two PX units, with a combined design capacity of 835 kt/a, by purchasing more of the intermediate raw material mixed xylene (MX). The output of PX in 2013 reached 939.2 kt, a new historical high. The 600 kt/a PX plant of Sinopec Hainan Refining & Chemical Co., Ltd. was successfully wet commissioned on December 27, 2013. Sinopec became the third largest patent holder in the world of large-scale aromatics production technology with full intellectual property rights, surpassed only by UOP of the United States and IFP of France.


Table 1   Major PX producers in China, 2014

Producer                                             Capacity (kt/a)
Sinopec Shanghai Petrochemical Co., Ltd.                   835
Sinopec Yangzi Petrochemical Co., Ltd.                       800
Sinopec Fujian Refining & Chemical Co., Ltd.               770
Sinopec Zhenhai Refining & Chemical Co., Ltd.               650
Sinopec Jinling Petrochemical Co., Ltd.                    600
Sinopec Tianjin Petrochemical Co., Ltd.                    334
Sinopec Luoyang Petrochemical Co., Ltd.                       215
Sinopec Qilu Petrochemical Co., Ltd.                         64
Sinopec Hainan Refining & Chemical Co., Ltd.                600
Subtotal of Sinopec                                         4 868
PetroChina Urumqi Petrochemical Co., Ltd.                  1 000
PetroChina Liaoyang Petrochemical Co., Ltd.                   700
Subtotal of PetroChina                                     1 700
CNOOC Huizhou Refining & Chemical Co., Ltd.                   840
Dalian Fujia Dahua Petrochemical Co., Ltd.                 1 400
Qingdao Lidong Chemical Co., Ltd.                            700
Tenglong Aromatics (Zhangzhou) Co., Ltd.                  1 600
Total                                                     11 108


Producers were profitable despite declining prices

Last year, due to low operating rates in the PTA sector downstream and widespread expansion of PX capacity in Asia, PX prices in Asia first went up and then came down later in the year. Prices generally floated, with some reduction. The average Korean FOB price of spot PX was US$1 471/t in 2013, a drop of US$25/t and 1.67% from 2012.
Today, PX is mainly produced through the naphtha route or the MX route. Judging from the trend of upstream raw materials in 2013, the profit in the PX production in Asia was at a relatively high level at the beginning of the year, and the profit margins of the MX route and the naphtha route were respectively around US$180/t and US$400/t. Profits started to come down in the second half of the year. The PX-MX was selling near cost in September. Operators of some units in Korea, therefore, started to slow down or shut down. Despite some reduction of the margin, the overall PX-naphtha price difference was still maintained at around US$400-500/t and the profit margin was in a range of US$100-200/t. Around 80% of PX units in Asia use the naphtha route, so overall, PX profits were still okay compared to the losses suffered midstream and downstream of the polyester sector. PX producers still got the lion’s share of the profit in the polyester industrial chain.
The price of PX in the domestic market went all way up at the beginning of 2013. The average price of RMB12 500/t in February was the highest for the whole year. Prices then came down gradually and dropped to RMB10 550/t in July. A rebound was made in September and October to RMB11 100/t, but prices started to come down again and dropped to RMB10 500/t in December. With the expected improvement in the PX supply, the high profitability started to shift downstream from PX production to PTA and polyester. A possible drastic expansion of PX capacity in Asia this year would ease the supply shortage and weaken the bargaining ability of PX producers. It is expected that the profit margin of PX production will be further narrowed in 2014, and for a few years to follow.

Table 2   New and expansion projects of PX in China

Firm    Corporate context    Plant site    New capacity
(kt/a)    Time for starting production    Project progress    Remark
Ningbo Zhongjin Petrochemical Co., Ltd.    private    Ningbo of Zhejiang     
700    2015    Under construction    new
Sinopec Shanghai Petrochemical Co., Ltd.    Sinopec    Shanghai    
100    2015    Under construction    renovation and expansion
Sinopec Hainan Refining & Chemical Co., Ltd.    Sinopec    Hainan    
600    -    Preparations for construction    second-phase
Sinopec Beijing Yanshan Petrochemical Co., Ltd.    Sinopec    Caofeidian of Hebei    
900    -    Preparations for construction    new
Sinopec Maoming Petrochemical Co., Ltd.    Sinopec    Maoming of Guangdong    
600    -    Early-stage work    new
Sinopec Luoyang Petrochemical Co., Ltd.    Sinopec    Luoyang of Henan    
600    -    Early-stage work    expansion
Sinopec Jiujiang Petrochemical Co., Ltd.    Sinopec    Jiujiang of Jiangxi    
600    -    Early-stage work    new
Sinopec Qilu Petrochemical Co., Ltd.    Sinopec    Zibo of Shandong    
100    -    Early-stage work    expansion
Sinopec Yangzi Petrochemical Co., Ltd.    Sinopec    Nanjing of Jiangsu    
400    -    Early-stage work    renovation and expansion
Sinopec Tianjin Petrochemical Co., Ltd.    Sinopec    Tianjin    
270    -    Early-stage work    renovation and expansion
Liaoning North Huajin Chemical Industries Co., Ltd.    China North Industries Corporation    Panjin of Liaoning    
1 300    -    Early-stage work    new
Sinochem Quanzhou Petrochemical Co., Ltd.    Sinochem    Quanzhou of Fujian    
800    -    Early-stage work    new
CNOOC Huizhou Refining & Chemical Co., Ltd.    CNOOC    Huizhou of Guangdong    
800    -    Early-stage work    second-phase
Guangxi Qinzhou Jialong Investment Group Co., Ltd.    PetroChina    Qinzhou of Guangxi    
1 000    -    Early-stage work    new
Hebei Jiurui Chemical Co., Ltd.    PetroChina    Renqiu of Hebei    
800    -    Early-stage work    new
Hengli Petrochemical (Dalian) Co., Ltd.    private    Dalian of Liaoning    
3 000    -    Early-stage work    new, two phases with
1 500 kt/a each phase
Yuntianhua Group Co., Ltd.    local state-owned    Kunming of Yunnan    
650    -    Early-stage work    new
Total    13 220             


Many plants are planned but few are under construction

The growing awareness of environmental threats in recent years has inhibited the expansion of PX capacity in China, thus the supply shortfall has widened constantly. In May 2013, the National Development and Reform Commission lifted its examination of PX renovation and expansion plans, which can help activate market vitality. PX capacity under construction today mainly includes the new 700 kt/a unit of Ningbo Zhongjin Petrochemical Co., Ltd. and an expansion from 235 kt/a to 330 kt/a by Shanghai Petrochemical Co., Ltd. These two units are expected to start production in 2015. The second-phase unit in Sinopec Hainan Refining & Chemical Co., Ltd. and the planned Caofeidian refining plant in Beijing Yanshan Petrochemical Co., Ltd. are being prepared for construction. Besides, Liaoning North Huajin Chemical Industries Co., Ltd., Guangxi Qinzhou Jialong Investment Group Co., Ltd., Sinochem Quanzhou Petrochemical Co., Ltd., CNOOC Huizhou Refining & Chemical Co., Ltd. and Hengli Petrochemical (Dalian) Co., Ltd. all have plans for constructing new PX units or expanding existing PX units. These plans are mostly being pursued slowly and the capacity will mainly be completed and put on stream after 2018. See Table 2 for detail.
It is expected that this year’s PX output in China will be around 9.50 million tons, an increase of 23.4% over 2013. Based on the present status of the above-mentioned capacity being constructed or planned for construction and the possibility of plans not yet made public, it is expected that the total capacity for PX in China will reach around 23.00 million t/a by the end of 2020, the output will be around 22.00 million tons and the operating rate will be around 96%.

Downstream, PTA production scale expands rapidly

Almost all the PX in China is used to make PTA. In 2013 the only new PTA capacity in China was a 400 kt/a expansion by FCFC Xingye (Ningbo) Co., Ltd. Both the second-phase 4.50 million t/a unit of Xianglu Petrochemical Co., Ltd. and a 1.50 million t/a unit of Jiangsu Honggang Petrochemical Co., Ltd. were planned to start production at the end of 2013 but were postponed to the first half of 2014. There were 22 PTA producers in China at the end of 2013, and their total capacity was around 33.07 million t/a, a slight increase of only 1.2% over the previous year.
Back in 2012 however, a massive amount of PTA capacity was released in the second half of the year, so output increased considerably in 2013, reaching 25.00 million tons, an increase of 25.5% over the previous year. Simultaneous with that considerable output increase, the import volume fell 48.9% y/y to 2.743 million tons. The export volume was only 0.126 million tons, but that was a 13 fold increase. The apparent consumption was 27.617 million tons, an increase of 7.2%. The self-consumption rate increased considerably, reaching 90.5%, an increase of 11.3%.
China’s PTA capacity will keep growing very fast – around 22.00 million t/a during 2014-2020, bringing the total capacity to 55.00 million t/a. The sustained growth of privately owned PTA capacity will continue to be the major driver for the development of the polyester sector. The polyester sector in China as a whole will keep growing steadily and rapidly in the next few years, with capacity reaching about 56.00 million t/a in 2020, promoting the demand for raw material PTA.
With the constant expansion of PTA capacity, the supply of PTA in China has increased in recent years. The import volume keeps coming down – the self-sufficiency rate grew from 56.4% in 2007 to 90.5% in 2013. It is expected that the self-sufficiency rate will increase to around 107.3% in 2020, making China a net PTA exporter. Figure 1 shows the supply/demand history and forecast for PTA, 2007-2020.
Import dependence increases due to insufficient domestic output

The apparent consumption of PX in China was 16.572 million tons in 2013, an increase of 19.9% over the previous year. The output was 7.70 million tons, the same as the previous year. The import volume went up 44.0% y/y to 9.053 million tons, an all-time high . The export volume was 181kt, a drop of 5.7%. The import dependence was 53.5%, an increase of 9.4%. Major import sources included Korea, Japan and Taiwan – respectively supplying 2.81 million tons, 2.17 million tons and 1.63 million tons, together accounting for 72.9% of the total import volume. Compared with 2012, the amounts imported from these three regions were higher by 47.5%, 22.4% and 184.2% respectively.
It is expected that the PX production shortfall will likely widen in 2014, the net import volume will reach around 9.00 million tons and there will still be supply shortage. Judging from the progress of PX and PTA capacity construction today, China will continue to import great quantities PX for the next few years. It is expected that the output of PTA will reach around 44.00 million tons in 2020, requiring around 28.80 million tons of PX. The output of PX at that time will however only be around 22.00 million tons, so there will be a gap of 6.80 million tons, and the self-sufficiency rate will be around 76.4%. Figure 2 shows the PX supply/demand history of 2007-2013 and the projection to 2020.
To increase self-sufficiency through promoting capacity construction

Pushed by the development of the textile sector (polyester fibers) and the packaging sector (beverage bottles and films), the PET sector will maintain stable growth in China, promoting PTA/PX demand. The heavy dependence on imported PX in recent years has led to high PX prices, seriously squeezing the profits of the PTA/polyester producers downstream. There was even an overall loss in 2013.
The rapid construction PX plants in Korea contrasts sharply with China’s experience. Stimulated by the brisk increase of the polyester fiber/PTA market demand in China, a drastic new round of PX capacity expansion has been triggered in Korea. HC Petrochemical Co., Ltd. of Korea put an 800 kt/a PX unit on stream in Daesan in January 2013. Three larger new units will all start production in 2014: a 1.00 million t/a PX unit of Samsung Total Petrochemical Co., Ltd., a 1.30 million t/a PX unit of SK Global Chemical Co., Ltd. and a 1.00 million t/a PX unit of SK JX Co., Ltd. (joint venture between SK Global and Nippon Oil). GSC Sunoco (joint venture of GS Caltex with Showa Shell Sekiyu and Sunoco) will also complete a 1.00 million t/a PX unit in Yosu city in 2015. With the completion of these plants, the capacity for PX in Korea will increase rapidly from 5.52 million t/a in 2012 to 10.62 million t/a in 2015.
Oil refining plants that are growing rapidly in China will provide more raw material for PX production. Both governments and enterprises should strengthen communications with the public and accelerate the construction of PX capacity so as to ease the pressure caused by the increasing PX output/demand gap in China.