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Chinese paraxylene buyers seek to delay deliveries post-declarations

July 22/2020

MOSCOW (MRC) -- Chinese paraxylene buyers in the CFR Taiwan/China market have been requesting to take delivery of cargoes later in the month of August, attempting to push back deliveries to the second half of the month, from the first-half, post-declaration for August delivery cargoes, market sources said this week, said S&P Global.

With supply chains disrupted by the COVID-19 pandemic, it has become the norm across Asia's petrochemical markets for both producers and end-users to be experiencing high inventories. As a result, PX buyers have been requesting for cargoes to arrive later in the month, post-declaration.

Producers, on the other hand, are looking to load at the earliest possible laycan for inventory management purposes, resulting in an "operational mess", market sources said. But this is no surprise to market participants as this issue has been recurring for months, exacerbating market's frustrations.

"This is becoming such a norm in the market where seller would declare first-half of the laycan, followed by buyer's request to push it to the second-half. While we accommodate as much as we can, there are many instances when we cannot adjust as vessels have already been chartered," an Asian trader said.

As stocks continue to build, the number of outlets capable of taking delivery is shrinking, made worse when specific requests cannot be met. Further, while arrangements can be made to match H1 laycan delivery to other buyers in earlier months, it has gotten tougher for August-delivery as the bulk of the cargoes are arriving in H1, several sources said.

"All my cargoes were declared for H1 delivery and buyers are requesting for H2 laycan. I can only pass the message up the chain. And there are so few outlets available now," another trader said.

The nomination process in the Asian PX market involves declaration of port and half-month laycan for delivery by the evening of the 15th of each month. As per market convention, the seller declares the half-month of delivery for the next month, while the buyer declares the delivery port.

PX is a feedstock for the production of purified terephthalic acid (PTA). PTA is used to produce polyethylene terephthalate (PET), which, in its turn, is used in the manufacturing of plastic bottles, films, packaging containers, in the textile and food industries.

According to ICIS-MRC Price report, in Russia, July formulae prices for contract customers were in the range of Rb65,000-67,500/tonne CPT Moscow, including VAT. Prices of material in the spot market remained steady last week, Russian producers continued to ship material from 20 tonnes at a price of Rb70,000-72,000/tonne CPT Moscow, including VAT.
Author:Anna Larionova
Tags:Asia, petroleum products, paraxylene (PX), PET-granulate, petrochemistry, PET bottles, PET films, PET preforms.
Category:General News
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