The price of paraxylene, which is a raw material for PET bottles, jumped in the past one month with China banning the import of waste plastic. South Korean oil refining companies, which have continued to increase their paraxylene production capacity, are expected to benefit from the situation.
According to the Korea Petrochemical Industry Association, paraxylene price rose from US$1,247 per ton to US$1,372 between August 24 and 31. The price had reached US$1,051 per ton on July 24, breaking the US$1,000 mark for the first time since 2014.
The margin, that is, the paraxylene price excluding the naphtha price, rose from US$350 to US$416 between the first and third quarters of this year, too. It reached US$638 on September 3.
At present, South Korean companies’ paraxylene production capacity totals 10.51 million tons. Hanwha Total accounts for 19% of it, followed by S-Oil (18.1%), SK Incheon Petrochem (14.3%), GS Caltex (12.8%), Hyundai Cosmo Petrochemical (11.2%), Ulsan Aromatics (9.5%), SK Global Chemical (7.9%), and Lotte Chemical (7.1%). SK Incheon Petrochem, Ulsan Aromatics and SK Global Chemical are subsidiary companies of SK Innovation, which is the sixth-largest in the world in terms of paraxylene production.
The recent rapid increase in price is because of Chinese companies’ limited capacity utilization as well as the import ban. “As a result of the import ban by China, which is the largest waste plastic importer in the world, the price of purified terephthalic acid as a raw material for plastic rose, and then the price of paraxylene as a raw material for purified terephthalic acid rose,” said an industry source, adding, “Chinese companies’ facility troubles in China and Vietnam added to the increase, too.” He continued to say, “Oversupply may come back once Chinese companies put their new facilities into operation in the first quarter of 2019 after regular maintenance.”
According to the Korea Development Bank, paraxylene facility expansion in China is estimated to reach 17.7 million tons and 5.9 million tons in 2019 and 2020, respectively. China’s total production capacity is predicted to reach 30 million tons in 2020.