Climbing crude oil prices in recent weeks have made their presence felt where European Paraxylene (PX) market observe significant rise in PX prices owing to resurgence in ICE Brent crude oil values. Crude oil has gained close to 25% in last four weeks, latest increase in crude prices come in lieu of strong demand fundamentals and weakened supply dynamics amid tensions in West Asia.
The fortunes of aromatics and crude oil have long been intertwined where increase in crude values have been translated into rise in aromatics prices and recent developments epitomize the above sentiment. European Paraxylene prices have gained nearly 8% on weekly basis during the third week of January. Another key factor at play has been the increasing demand from downstream Polyethylene terephthalate (PET). PET prices have been off the charts in last few months stemming from strong demand from downstream users and curtailed production rates. Limited availability of feedstock (Purified Terephthalic Acid) in European market has hampered the production of PET.
Similar trends have also been observed in Asian markets where Paraxylene prices in South Korea and China have measured significant rise in last few days owing to strong crude oil prices.
As per ChemAnalyst, “Paraxylene forms a crucial component in PET value chain and recent increase in Paraxylene Prices is likely to pile cost pressure over downstream PET prices. However, prices crude oil prices receded in last couple of days which may ease the cost pressure over aromatics and in turn over Paraxylene and its downstream products.