Looking at the domestic xylene market in 2019, the overall market is characterized by high volatility. The fluctuation of crude oil market and the change of supply and demand of industrial chain have a great impact on the market trend. According to the data of the business club’s large scale list, the xylene market opened at 4976 yuan / ton at the beginning of the year, with a minimum of 4880 yuan / ton, then rebounded wave by wave, reaching a peak of 6910 yuan / ton in mid October, and then gradually fell back to 5990 yuan / ton. It rose about 20.3% in the whole year, with the highest increase of about 38.9% and the largest fluctuation of about 41.6%.
1、 Price trend
2、 Retrospective analysis
The first stage: from the beginning of January to the middle of April, it opened at 4976 yuan / ton, with a minimum of 4880 yuan / ton, then rebounded to a maximum of 5770 yuan / ton, up about 18.2%. The main factors supporting the rebound are the industry’s bottom reading rebound and the support driven by the rise of crude oil.
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1.4q2018 rebound and bottom reading after slump
Since the beginning of November 2018, xylene has fallen rapidly by nearly 3000 yuan / ton, and the market price has returned to a low level. Some people in the industry began to enter the market to copy the bottom, and the port storage in East China even appeared the status of no irrigation available.
2. Crude oil rise provides cost support
At the beginning of the new year, the price of the international crude oil market stabilized and fluctuated upward, supporting the cost of upstream petrochemical products. Driven by the resumption of work, xylene market is expected to increase bullish.
3. Gradual easing of Sino US trade
Due to the gradual easing of Sino US trade progress and the expected improvement of downstream demand, xylene market began to rebound steadily.
The second stage: from late April to early June, from 5770 yuan / ton to gradually callback, the lowest to about 5250 yuan / ton, down about 9%. The main factors of the shock correction are the negative impact of the environmental protection incident of the affected water and the drop of crude oil shock.
1. High inventory and weak demand
With the xylene port inventory rising to a new high in recent two years, the progress of Sino US trade negotiations has been surging again, and there is no sign of recovery in downstream demand. Market participants’ expectations for demand have fallen, and the xylene market has started to shake back.
2. International crude oil shocks fall
With the warmer weather in the northern hemisphere, the seasonal decrease of heating oil demand, coupled with weak industrial demand, led to the downturn of the refined oil market, the failure of the petrochemical industry chain to keep pace with the rise of raw material prices, resulting in serious losses in the second quarter of the restructuring industry chain, the reduction of production load of some disproportionation units and restructuring units, the reduction of crude oil demand, and the correction of price shocks.
3. Water environmental protection incident
Due to the further investigation of the domestic safety and environmental protection inspection of the water incident, some enterprises were forced to shut down in stages. Under the negative impact of many demand areas such as Sinopec and PetroChina stopping the export of refined oil in some areas and selling off inventory in large quantities, the demand of xylene industry was weak, and the market price began to fall.
The third stage: from the middle of June to the first ten days of October, xylene has come out of the strongest rebound trend in the year. It has rebounded steadily since the opening of 5250 yuan / ton, with the highest rising to about 6910 yuan / ton, up about 31.6%. The main factors supporting the rise are the sudden increase in tensions between the US and Iran, as well as the tight supply-demand relationship.
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1. Oil transfer and PX demand promotion
In July, the demand for oil transfer is booming, and the sales volume of xylene is increasing, especially in the first half of the year when PX added more production capacity, which led to a large demand for xylene production outside Hengli petrochemical and other enterprises. In addition, the 70th National Day military parade made the market worry about the transportation of dangerous chemicals in advance. In September, the downstream stock was active, which broke the supply and demand structure of the xylene market, and also promoted the xylene market price to rise strongly.
2. Continuous decline of port inventory
From the end of March to the middle of July, the arbitrage window of the internal and external market was basically closed. With the price rising all the way, traders were more cautious in importing xylene. The average monthly import volume of xylene in 3q2019 continued to fall compared with that in 2q2019, down nearly 50%, resulting in the rapid consumption of port inventory, from more than 60000 tons in early July to less than 20000 tons in late September.
3. Tensions between the United States and Iran prompt traders to fill the gap
The strong rise from July to August has pushed the price of xylene to a high level of about 6000 yuan / ton in the year. At this time, there are many views on the short trend of crude oil, leading some traders to short the xylene in late September. However, the tense US Iraq relationship suddenly intensified, which prompted the international crude oil market to jump into the sky and soar, and then promoted the demand for replenishment of air space in late September. When the port inventory has dropped to the ultra-low level, the market price of xylene will then soar out of control.
The fourth stage: from the middle of October to the end of December, it began to slow down from 6910 yuan / ton, with a minimum of about 5710 yuan / ton, down about 17.4%. The main factors contributing to the lower volatility are weak downstream demand and increased market supply.
1. Increase in market supply
With the strong rise of domestic xylene price in September, the arbitrage window of internal and external market was opened again, and the arbitrage space was large. In the middle of October, xylene import increased, and port inventory began to increase.
2. Weak downstream demand
With the seasonality of oil transfer demand becoming weak, the demand for solvents gradually entered the off-season from November to December. Due to the narrow price gap of px-mx for a long time, coupled with the weak export demand of the downstream textile industry, the operating rate of PX manufacturers decreased, and the demand for xylene decreased, and the market price gradually fell down.
3. Technical callback
Just like the bottom reading rebound after the sharp fall of 4q2018 at the beginning of the year, the xylene market experienced a sharp rise from the first ten days of September to the first ten days of October. Under the negative balance of market supply and demand scissors, it started the trend of spit back adjustment.
3、 Industrial chain:
Upstream: crude oil
Downstream: px-pta
Four. Future prospects
Looking forward to 2020, xylene analysts of business and chemical branch think that it is advisable to focus on the international crude oil trend under the expectation of OPEC production reduction, the demand of downstream px-pta, port inventory fluctuation and market turnover. Overall, it is expected that xylene market will continue to fluctuate in the band, and the key is to grasp the time and opportunity.
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