Long-term contracts for buying and selling of isomer-grade mixed xylene on a CFR Taiwan basis next year are likely to settle at a discount of $12/mt to monthly CFR Taiwan assessments, a discount of $2-$3/mt deeper than the 2017 term contracts, traders said Wednesday.
The discount was agreed between traders and Formosa Chemicals & Fibre Corp., a major Taiwanese buyer, but other terms and conditions were still pending before the contracts could be signed, sources said.
A company source with FCFC declined to comment on the matter on Wednesday.
The deeper discount comes amid recent supply increases in the Chinese MX market and expected addition of new capacity in Japan in early 2018.
Another reason for the deeper discount is that FCFC is expected to reduce its term contract ratio in 2018, sources said, which means more spot cargoes will be likely available in the MX market in Northeast Asia next year.
Japan’s Idemitsu Kosan plans to start a new C8 splitter in February at its refinery in Aichi, which will add production capacity of 170,000 mt/year of mixed xylene, S&P Global Platts reported earlier.
In China, Shandong-based Sinochem Hongrun started its new 1.2 million mt/year reformer in March, producing about 1,200 mt/day of isomer-MX, market sources had said earlier.
Also, PetroChina started its new greenfield Yunnan refinery around August, which has the capacity to produce around 380,000 mt/year of isomer-MX.
The second phase of CNOOC’s 12 million mt/year, or 240,000 b/d, Huizhou refinery in the southern Guangdong province started around the same time, adding 160,000-300,000 mt/year of isomer-MX to the market.
Meanwhile, on an FOB Korea basis, a producer said that he was aiming to settle at a premium of $0.5-$1/mt over Platts FOB Korea assessments for the 2018 long-term contracts, down from a premium of about $3/mt in 2017.
However, earlier in November, Taiwan’s CPC Corp. awarded its sell tender for 2018 term cargoes at a discount of $11-$13/mt to Platts’ FOB Korea isomer-MX assessments, down from the 2017 settlements at a single-digit premium.
The three buyers were companies based in China, Japan and Taiwan, each set to receive one 5,000 mt cargo/month.
- Platts.com
