Asian isomer-grade mixed xylenes have started 2014 in a slump, down 17% year on year Tuesday, as demand from new paraxylene plants in the region has likely been delayed until the second half of the year, sources said.
The FOB Korea isomer-MX marker slipped $10/mt from Monday to be assessed at $1,190/mt Tuesday, down from $1,427.50/mt a year earlier, when the market surged to a 4 1/2-year high because South Korea’s Hyundai-Cosmo Petrochem started commercial operations at its 800,000 mt/year PX plant in Daesan. Isomer-MX is a feedstock for producing PX.
“Although the isomer-MX balance flipped to ‘net-short’ in H2 2013, and the balance may be worse this year due to new PX plants startups, the Asian isomer-MX prices are weakening,” a trader based in Seoul said.
In October, the Korea Petrochemical Industry Association estimated that isomer-MX production would fall 785,000 mt/year short of demand in 2013 and 1.9 million mt/year short in 2014. LOWER PX RUN RATES PRESSURE MX PRICES
However, PX producers have significantly scaled back operations, and that weaker demand has been the main reason for the downturn in the Asian isomer-MX market, sources said.
South Korean PX producer Lotte Chemical shut its No. 1 PX unit in August, and South Korean PX producer HC Petrochem cut run rates at its No. 2 PX unit to 80% of capacity last summer due to poor PX production margins.
The PX/isomer-MX spread on a CFR Taiwan basis was assessed at $206.50/mt Tuesday. It fell to a three-year low of $160/mt on November 13.
Taiwan’s state-owned CPC, another major isomer-MX, will likely become a net exporter of the product this year, instead of a net importer, as it has been producing more isomer-MX by using feedstock reformate supplied by its own system.
CPC bought around 60,000 mt of isomer-MX via tenders last year, down from its typical annual purchase volume of 100,000 mt.
The recent reopening of the US-Asia isomer-MX arbitrage on paper and higher run rates of toluene disproportionation or TDP units have created to surplus isomer-MX supply, which further dragged down prices.
“The Asian benzene demand and price is very good now, so it seems TDP operating rates are increasing, which also pushed up MX production,” said a market source. TDP units produce benzene and MX from toluene and C9.
The US-Asia isomer-MX arbitrage reopened November 27 following weakening prices in the US Gulf Coast. The spread between benchmark isomer-MX CFR Taiwan and FOB US Gulf was assessed at $92.93/mt Tuesday, which indicates it remains open. MX DOWNTREND TO PERSIST ON DELAYED PX PLANTS
Asian isomer-MX prices are expected to remain on a downtrend for the first half of the year, due to weak PX and purified terephtalic acid markets and to delayed startups of new PX plants in Asia, a trader said.
“PTA demand may not flip to uptrend anytime soon, and the PET demand also may not increase until summer peak season, thus PX prices may not likely be supported.” he said.
Another market source saw no indications of an upturn in the Asian isomer-MX market, with most new PX projects deferred to H2 2014.
In South Korea, both SK Innovation and a joint venture between Japan’s JX and South Korea’s SK Global Chemical have delayed the startup of their new PX plants to H2 2014, from H1 2014.
SK Innovation is building a 1.3 million mt/year plant at Incheon, and the JX-SK Global Chemical joint venture is building a 1 million mt/year plant at Ulsan.
Samsung Total’s 1 million mt/year unit at Daesan is expected to start in June.
In India, state-owned Oil and Natural gas Corp. has delayed the startup of its 900,000 mt/year of PX plant in Mangalore to after March, from its last target of February.
Source: platts.com
