Orthoxylene supply in Europe has remained tight this week against expectations it would ease following the recent restarts of two large capacity plants, sources said.
Trade sources cited reasons such as restricted supply from Russia and the ramp-up of a downstream phthalic anhydride plant after a restart earlier this month as reasons behind the tightness.
As a result of the tightness, European OX prices have remained strong, having firmed 3.5% over the past month to $827/mt FOB ARA Wednesday.
Arbitrages to ship in OX to Europe from both Asia and the US were open, sources said.
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“Supply is tight from Russia. They are using more MX [mixed xylene feedstock for OX] for gasoline blending [in Russia],” a trader said, adding that a lack of MX had resulted in lower production of OX.
According to Eurostat data, the EU imported 7,455 mt of OX from Russia in April, down 11% year on year. The EU imports anywhere from 2,000-14,000 mt of OX from Russia per month.
So far in 2017, imports have ranged between 4,291 mt and 7,455 mt.
“Imports from Russia have substantially come down recently,” another trader said. “Europe is a small market for OX and if there are any supply disruptions, prices tend to rise,” a third trader said.
Another reason for tightness in OX supply is the restart of Austrian company Atmosa’s 50,000 mt/year PA plant in Schwechat and its ramp-up to reach full production rates. The plant is one of the largest consumers of OX in Europe.
The market has continued to experience a dearth of OX even as supplies have improved recently. BP Refining and Petrochemicals lifted the force majeure at its 70,000 mt/year OX unit at Gelsenkirchen, in Germany early in June and its supplies in the market are back to normal.
Shell was also said to have resumed production from its 60,000 mt/year plant at Wesseling earlier this month after a more than month-long shutdown.
ARBITRAGES OPEN
Arbitrages to import OX from both Asia and the US into Europe were seen as open. Traders have reported cargoes being imported to meet short supplies both during June and July.
While OX in Europe was last assessed at $827/mt FOB ARA, that in Asia was last assessed at $690/mt CFR China. In the US, the product was last assessed at $749.36/mt FOB USG.
While the freight to ship orthoxylene from Far East Asia to Europe could range from $80-$100/mt, that to ship it from the US could range from $30-$45/mt.
