From June 2019, the prices of China-origin mixed aromatics kept growing until the middle of September. During that period, the total price increase of C9 aromatics reached RMB 1,574/mt, while the total price increase of reformed aromatics reached RMB 1,819/mt. However, from the middle of September, the prices of China-origin mixed aromatics started slumping, and during the last 30 days, the prices of C9 aromatics and reformed aromatics dropped by over RMB 700/mt.
As an important gasoline blending component, the mixed aromatics market is closely associated with the gasoline market. Therefore, the peak season of gasoline market from September to October also becomes the peak season of mixed aromatics market. However, in 2019, the prices of mixed aromatics started slumping about one month before the end of its peak season.
The slump of mixed aromatics prices was from the middle of September, during that period, the prices of mixed aromatics surged at first because the assaults at Saudi Arabia’s crude oil facilities made many mixed aromatics participants in China adopt bullish attitudes. However, the crude oil output in Saudi Arabia revived rapidly, and the international crude oil started dropping from highs. As a consequence, most participants became resistant to the high-priced mixed aromatics. The replenishment at downstream users declined, and most of the users purchased on a need-to basis. In order to reduce inventory pressure, many traders had to decline their offers to promote sales, but the effect of the price cut was limited. That was the beginning of the slump of mixed aromatics prices.
Downstream users used to started intensive replenishment after the National Day holiday in the past years, but in 2019, the scale of replenishment at downstream users after the National Day holiday was limited, giving thin support to the sales of mixed aromatics at traders. Though the replenishment at downstream users started from October 3 successively, the overall dealings in the mixed aromatics market stayed tepid.
Recently, the offers at most mixed aromatics traders remained at relatively highs levels, but according to SCI, the actual dealing prices of mixed aromatics continued dropping. The reason led to that situation was that most traders still held bullish attitudes toward the future mixed aromatics market. In the last several years, the mixed aromatics market was still in its peak season in October, and currently, many traders believe that it is possible for mixed aromatics market to become bullish again.
In conclusion, there were three factors leading to the recent continuous decline of mixed aromatics prices: first, the international crude oil market stayed bearish; second, the state-owned refineries’ gasoline purchase prices from independent refineries were relatively low, and the mixed aromatics arbitrage profits became limited. Therefore, many downstream participants reduced their replenishment of mixed aromatics; third, the prices of mixed aromatics stayed at high levels at first, and though recently, the prices kept dropping, most participants still stayed on the sideline, waiting for the further decrease of the prices.
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