By Fu Mingxia and Zheng Hui, PetroChina Jilin Petrochemical
Production status and forecast
China's o-xylene (OX) production capacity remained stable in 2022 at 1.587 million t/a, with an output of 1.1 million tons. As of now, China has 13 OX manufacturers, and the largest is Sinopec Yangzi Petrochemical Co., Ltd., with a production capacity of 260 000 t/a. Figure 1 shows the production capacity, output and operating rate of China's OX from 2018 to 2022. At present, large petrochemical companies have no new or expansion plans, and OX production capacity may not change much in the future. Table 1 shows the domestic OX production status in 2022.
Figure 1 The production capacity, output and operating rate of China's OX from 2018 to 2022
Consumption status and forecast
The output of China's OX generally had an M-shape fluctuation and a slow upward trend from 2018 to 2022, and the output had slight decrease in 2022. Table 2 shows the supply and demand balance of China's OX from 2018 to 2022. In 2022, China's OX output was 1.1 million tons, the total import volume was 61 000 tons, and the apparent consumption reached 1 126 900 tons, a year-on-year decrease of 18.8%. Both the production and apparent consumption of China's OX inched down in 2022, which was affected by the project maintenance from Sinopec Hainan Refining & Chemical Co., Ltd., Sinopec Yangzi Petrochemical Co., Ltd. and Zhenhai Petrochemical Co., Ltd., and the restricted demand of downstream OX-based PA which was due to the Winter Olympics and unexpected shutdowns of some projects.
OX can be used to produce phthalic anhydride (PA), dyes, pesticides, drugs and vitamins, etc. With the increase of OX production capacity and the decline of PA production capacity in recent years, OX is no longer in short supply as previous years, with increasing supply capacity. With the narrowing profits of domestic OX-based PA, the enthusiasm for the production of PA may decrease in the future, and the tight supply of OX is likely to become oversupply. It is expected that the production capacity of OX will remain stable in 2023, and the overall output will increase.
Price analysis and forecast
In 2022, China's OX market showed a trend of three small waves, with three peaks, respectively in the mid-to-late March, mid-June and mid-October. In mid-to-late March and mid-June, the main reason was the surge in crude oil, which supported the OX market; in mid-October, it was mainly due to the active demand for OX-based PA in the downstream and the tight supply of OX. The two lows occurred in late April-early May and August respectively, mainly due to poor terminal demand, the profit of OX-based PA is inverted, which restricts the OX market. See Figure 2 for details.
Figure 2 The market price of China's OX in 2022
It is expected that the international crude oil price will decrease year-on-year in 2023, and the support for OX in raw material end will weaken. In terms of supply, there will be no new OX units put into operation in 2023. The price gap between downstream OX-based PA and naphthalene-basedPA may return to normal, and the demand for OX-based PA in 2023 may be better than that in 2022. However, restricted by raw materials and downstream markets, the price is difficult to exceed the high price in 2022. It is expected that the price of OX may fluctuate between RMB6 000 and RMB9 000 per ton in 2023.
Import and export analysis and forecast
In 2022, China imported 61 000 tons of OX, a decrease of 65.73% from 2021; the export volume was 34 100 tons, an increase of 582% over 2021. The comparison of import and export volume of OX in China in 2021/2022 is shown in Figure 3.
Figure 3 Comparison of import and export volume of OX in China in 2021/2022
From Figure 3, it can be seen that the largest export volume was 14 200 tons in May 2022, accounting for 38% of the total export volume in 2022. The main reason is that the US dollar market rose sharply, especially the US aromatics market, the arbitrage window was opened, and the domestic price of OX was at the bottom of the world price, leading to a substantial increase in exports. There was no export volume in the first quarter, mainly due to the domestic OX market soaring, and speculation of maintenance, domestic market made a large number of stocks, so there was no source of export goods.
It can be seen from Figure 4 that although China's total import of OX in 2022 decreased, the import trading partners did not change much, and the main import trading partners were still South Korea, Singapore, Japan, India and Taiwan of China.
Figure 4 Proportion of the import sources of China's OX in 2021/2022
It can be seen from Figure 5 that the exports of China's OX in 2022 were relatively scattered, and the destinations were mainly in Southeast Asia and Europe. Among them, South Korea ranked first, accounting for 44.97%; followed by Taiwan, China, accounting for 17.29%; the Netherlands was third, accounting for 14.64%; Malaysia was fourth, accounting for 14.36%; Belgium was fifth, accounting for 8.74%.
