An April 6 explosion at a Para xylene plant in Zhangzhou, Fujian province is the second safety incident at the highly controversial PX facility in China. The facility is owned and operated by Taiwanese-invested Dragon Aromatics (Zhangzhou) Co. Ltd., one of the largest independent PX producers in China. PX is a building block for PET resin and fiber. The Zhangzhou project started construction in 2009, but before it even went on stream in 2013, it was fined by environmental protection agencies for unapproved feedstock change, from naphtha to condensate. The plant had a smaller explosion in 2013. The facility was not in production but rather at the end of a three week maintenance service project when the incident happened.
Dragon Aromatics comprises two 800 kta PX lines, began commercial operation in mid-2013. PX capacity in northeastern Asia totaled 25.6 mta in 2014, which about 11.6 mta was located in China. In 2015 China PX capacity will increase to 13.6 mta. However, Dragon Aromatic PX capacity is 1.6 mta and count 12% of domestic in 2015. We expect that PX regional supply and demand will be impacted significantly. Xianglu PC owns PTA capacity reached 6.15 mta and count 13.2 % of China domestic amount currently. The mill in Zhangzhou has three PTA lines and capacity 1.5 mta for each. In addition, the mill in Xiamen has a 1.65 mta of PTA line. Due to safety and environmental concern, Chinese people will further against PX plant locate nearby in their living area. In the short term, all polyester supply chain product prices will inched up. Polyester demand will lift because downstream mills increase their inventory and push prices increment.