PX and PTA main contracts rose by 3.99% and 3.53% respectively on April 15. The continued price increase is attributed to expectations of further tightening in PX supply due to the blockade of the Strait of Hormuz. Additionally, with the seasonal peak demand period for gasoline approaching, market expectations for blending into the gasoline pool are beginning to intensify.
On April 13, South Korea's Hanwha issued a force majeure notice, stating that due to the ongoing disruption in raw material supply, production levels have been continuously reduced and existing inventories have been depleted. Consequently, the company anticipates a significant reduction in its PX supply capacity starting from May 2026. This announcement has further fueled market expectations for a continued contraction in PX supply.
Domestically, numerous maintenance turnarounds for PX facilities are still scheduled for the second quarter. Some of these maintenance plans might be brought forward due to raw material shortages. PX inventories have been in a drawdown cycle since March, and this trend is currently expected to persist until around July. Concerns remain that supply could decrease further from current levels, with the possibility of additional reductions in operating rates both domestically and internationally. This could lead to an even larger inventory drawdown. Moving into May, PX inventories are projected to fall to relatively low levels. The supply issue for PX is expected to persist until navigation through the Strait of Hormuz is restored. Furthermore, news related to gasoline blending is exacerbating market worries about potential further supply shortages.
Regarding PTA, warehouse receipts and social inventories remain relatively high. However, planned maintenance turnarounds in April are being implemented. As buffer PX inventories are consumed, the impact on PTA plant operations is becoming more apparent. PTA supply in April is also forecasted to contract further, potentially shifting the market from inventory accumulation to drawdown. The fundamental outlook has improved significantly, with short-term downstream demand remaining stable.
A second round of negotiations between the US and Iran is imminent, but uncertainties persist. Continued attention is warranted on the actual withdrawal of forces by involved parties and the resumption of shipping through the Strait of Hormuz. In the short term, restoring supply will take time. Until the transit issues in the Strait of Hormuz are resolved, a strategy of buying on dips may be considered. However, given the volatility of market news and sentiment, position control is advised.
Risk warnings include the impact of macroeconomic policies, significant fluctuations in crude oil prices, and unexpected developments in the Iran situation.