[Haichuan Chemical News] Sinochem Hongrun’s 600,000-ton/year PX plant in Weifang, Shandong, was officially put into operation at the beginning of August

At present, although China is the world’s largest producer and consumer of PX, its reliance on imports at 60% means it has little say in the market. According to statistics from Chemical Online, by the end of 2018, China’s PX production capacity had reached 13.5 million tons, accounting for 31% of the global total. The production volume was around 11 million tons, while the apparent consumption volume was as high as 27 million tons. The severe shortage of raw materials has acted like a constraint on China’s polyester industry, prompting the country to strongly encourage the development of the PX industry. In 2014, the State Council delegated the approval authority for PX production. In 2016, the Ministry of Industry and Information Technology issued the \"Development Plan for the Petrochemical and Chemical Industries (2016–2020)\", which set a clear target of achieving a self-sufficiency rate of 65%-70% for PX in China by 2020.

Since then, China’s private refining and chemical industries, particularly the leaders in the polyester sector, have begun to move upstream. As an important link connecting the oil refining industry and the textile industry, PX projects have sprung up everywhere. After several years of effort, Hengli Petrochemical’s 4.5 million-ton PX production facility was officially put into operation in the first half of this year, marking the beginning of a surge in PX production capacity in China. However, similar to other products, as the domestic PX industry makes significant progress, supply overcapacity has also become an issue that must be taken into account within this industry. In 2019, in addition to Hengli Petrochemical, Hainan Refining & Chemical, Sinochem Hongrun, Liaoyang Petrochemical, Zhejiang Petrochemical, and Shandong Weilian Chemical planned to start operations, bringing the total production capacity to 6 million tons. By the end of this year, China’s total PX production capacity will reach 24 million tons, representing a growth rate of 78%. According to current plans, more than 45 million tons of production capacity are set to be added between 2020 and 2025; if these facilities come online as scheduled, it will lead to a rapid surplus in both the domestic and global markets.

The downstream PTA industry grew relatively slowly in the previous years, and it is set to experience a modest surge in production capacity from this year onward; however, this increase is still far smaller compared to the growth in raw material supply. In 2019, the 1-million-ton facility of Sichuan Nengtou, which had seen delays for several years, finally went into operation. Phase 1 of Xinfengming is scheduled to start production in the third quarter, while Phase 4 of Xinjiang Zhongtai and Hengli Petrochemical may begin operations by the end of the year. However, after 2020, aside from Phase 2 of Xinfengming and Phase 5 of Hengli, the rest are mostly in the planning stage, and it remains uncertain whether they will be put into operation on schedule. According to industry insiders, the recovery cycle in the downstream polyester industry is set to come to an end this time, while Sino-U.S. trade tensions also cast a shadow over the industry’s future. As for imports, according to customs data, China’s PX imports from January to June this year amounted to approximately 7.88 million tons, representing a 2.7% increase on a year-on-year basis. The two production units at Hengli Petrochemical came online in March and May respectively, and domestic imports dropped to less than one million tons in June, hitting a new low for monthly imports in two years.

A large production capacity is not a problem; keeping costs lower than those of imports is the key!

At this price, it’s hard to even comment on it; using it to refine gasoline would still yield more profit