The European spot price spread of paraxylene over upstream virgin xylenes on Friday reached its highest level since February.
With virgin xylenes (also known as mixed xylenes or MX, not to be confused with isomer metaxylene) assessed at $1,168/mt FOB ARA Friday and PX assessed at $1,410/mt FOB ARA, the spread between the two products climbed to $242/mt from $190/mt the previous week.
This is the highest the spread has been since February 15, when it was at $243/mt, according to Platts data.
Market participants say that a margin of around $200/mt is necessary for isomerization of MX to PX to be profitable, though some suggest that $150/mt is sufficient.
“I think isomerization is looking a bit more attractive,” said a trader.
So far this year, the spread has averaged $172/mt compared with $164/mt over the course of 2012.
Over recent weeks, the MX market has turned bearish, with prices heading downwards following prompt tightness heard in May and June.
Demand from the distribution sector has been weakening, while the market has been heard longer.
Since the beginning of June, the price has lost $72/mt.
Meanwhile, the PX spot price over the same period has gained $60/mt, pulled up by stronger prices in Asia and the US.
But sources said that the increased isomerization margin, as well as the opening of the MX arbitrage to Asia, have not yet begun pulling prices up.
This could be attributed to the fact that PX production rates are not currently at their maximum.
In addition, many PX producers have integrated MX.
Source: platts.com
