The US-Asia isomer-grade mixed xylenes arbitrage has shut on paper after being open for about a month, hit by higher US prices overnight Tuesday, Platts data showed Wednesday.
Asian isomer-MX CFR Taiwan was assessed at $1,297/mt Tuesday, up $2.50/mt day on day, while isomer-MX FOB US Gulf Coast was assessed at $1,248.36/mt, up 5 cents/gal ($15.15/mt) over the same period.
That left the isomer-MX spread between CFR Taiwan and FOB USGC at $48.64/mt, down $12.65/mt from Monday.
For the arbitrage economics to work, the Asia-US spread must be above $50/mt, based on a discounted term charter freight rate from the Gulf Coast to South Korea or Taiwan. Spot freight rates for the same route are currently at $78/mt for a 5,000-mt BTX cargo, according to Platts data.
Market sources did not expect the US-Asia isomer-MX arbitrage to last long.
“The driving season in the US will likely tighten isomer-MX supplies as more reformate will be used to make gasoline, rather than aromatics, including isomer-MX,” a trader said when the arbitrage reopened in early July. “Also, it is unclear how long the firmness of the Asian isomer-MX market will continue.”
A trader said Tuesday that around 40,000-50,000 mt of US isomer-MX fixed during the open arbitrage window would likely arrive in Asia in late September or October.
The US-Asia isomer-MX arbitrage re-opened on paper July 2, with the isomer-MX CFR Taiwan/FOB USGC spread assessed at $65.51/mt, up $20/mt day on day. It had been shut for more than seven months since November 20, when the spread was at $41.99/mt.
South Korea saw its first-quarter US isomer-MX imports shrink 14.9% year on year due to the closure of the arbitrage window last November, according to customs data. Typically, 800,000 mt/year to 1 million mt/year of US-origin isomer-MX heads to Asia.
Source: platts.com
