CITIC Futures: Strong support from international oil prices for chemical products, PX supply and demand pattern marginally weakening

Middle Eastern geopolitical uncertainties continue to emerge, and international oil prices remain strong, providing some support for chemical products. From a fundamental perspective, PX supply is increasing while demand is decreasing, leading to a marginal weakening of the supply and demand pattern. On the supply side, the short-term raw material shortage problem still exists, and some units are still expected to shut down in the future. The operating rate trend is bearish, but in the short term, due to poor gasoline profits, the PX-MX short-process price spread has strengthened, stimulating some companies’ marginal load recovery, which to some extent suppresses market sentiment. Regarding downstream demand, major PTA producers are implementing production cuts, accelerating the decline in PTA utilization, and the polyester segment is also increasing reduction efforts, significantly weakening PX demand support. Overall, PX costs still have some support, but its supply and demand pattern is more pressured in the short term than downstream, so prices are expected to face some resistance on the upside. However, the medium-term pattern remains optimistic for PX, and it is possible that downstream players will increase PX procurement after clearing inventories. Future market focus will be on geopolitical developments, changes in upstream and downstream units, and the impact of the U.S. Department of the Treasury’s enforcement measures on a private large refining and chemical enterprise in East China on the polyester segment. (CITIC Futures)