India's Reliance Industries Ltd and South Korea's Hanwha Total are
are looking to join the paraxylene Asian Contract Price negotiations, amid new
capacity additions by both companies in 2017, sources at RIL and Hanwa Total
said.
RIL's 2.2 million mt/year No. 2 aromatics plant at Jamnagar, commissioned
in late-December 2016, is now fully operational and has brought the company's
total PX production capacity to 4.2 million mt/year.
This makes RIL the world's second-largest PX producer, with a 9% share in
global PX capacity and 11% in global PX production, according to a company
statement on the plant's startup in late-December.
The No.2 plant has fed PX to RIL's downstream purified terephthalic acid
plants at Dahej and Hazira since January, while exports from the plant
commenced in February, according to a company source, who added that RIL's
total PX exports over the first four months of 2017 stood at 100,000 mt.
The source added that exports over the same period (January to April) in
2016 were "negligible," with the company importing significant volumes of
cargo for its downstream units.
Meanwhile, Hanwha Total is negotiating entry into the ACP and will add
200,000 mt/year of PX production to its existing output capacity once it
completes debottlenecking operations, scheduled over May-June, at its No. 2
Daesan plant.
The debottlenecking will bring Hanwha Total's No. 2 plant's PX capacity
to around 1.26 million mt/year from the current 1.06 million mt/year, and will
increase the company's total PX output to almost 2 million mt/year.
Traders and other ACP participants have said that the advantage the ACP
settlement affords large producers is a guaranteed outlet for cargoes, while
for buyers, stability of supply is afforded, at a fixed price.
Traders and ACP buyers have said that one criterion for considering a new
supplier's entry into the ACP is a history of stable and regular PX supply
(one year at least, according to some), while a requirement is two term
contracts with two end-users/buyers of the ACP.
There are five PX ACP sellers in Asia: Japan's JX Nippon Oil and
Energy, and Idemitsu Kosan, ExxonMobil, and South Korea's S-Oil and SK Global
Chemical.
There are currently six ACP buyers: BP, Taiwan's Capco and Oriental
Petrochemical (Taiwan) Corp., Japan's Mitsui Chemicals, and China's Yisheng
Petrochemical and Jiangsu Shenghong Chemical Fiber Co.
Japan's Mitsubishi Chemical's participation as a permanent member remains
uncertain following the sale of the company's PTA plants in India and China
last year, market traders and sources in the company have said.
RIL is also increasing exports at a time when the market is bracing for
lower availability of cargo from India's other PX exporter, ONGC Mangalore
Petrochemicals Ltd.
OMPL's aromatics plant at Mangalore is contracted to supply around 75% of
the feedstock needs of the neighboring downstream JBF Petrochemicals' 1.25
million mt/year PTA plant, which was last heard to be targeting a startup in
late-May, an OMPL source said earlier.
OMPL's last tender for paraxylene loading from January to June, 2017, sold
240,000 mt of cargo at a discount of approximately $37.50/mt to the Platts CFR
Taiwan/China marker, according to traders.
