The price spread between isomer-grade mixed xylenes and toluene on an FOB Korea basis slid almost to a four-year low of minus $12.50/mt Tuesday, due to weak isomer-MX demand, Platts data showed.
This spread, which is typically at plus $50-100/mt, was last lower on February 9, 2010, at minus $14.50/mt, according to the data.
On Tuesday, FOB Korea isomer-MX dropped $5/mt from Monday to $1,057.50/mt, a 19-month low, while FOB Korea toluene gained $2/mt over the same period to $1,070/mt, crunching the spread. FOB Korea isomer-MX was last lower on July 2, 2012, at $1,043/mt.
Asian toluene prices have been holding higher than isomer-MX since December on the back of increasing demand for toluene to make benzene and to use for gasoline blending in China.
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Both isomer-MX and toluene prices have been sliding recently, but the fall in isomer-MX has been steeper than toluene. The FOB Korea isomer-MX price slipped 13.9% from $1,228/mt on December 3 last year to $1,057.50/mt Tuesday. Meanwhile, the FOB Korea toluene marker fell from $1,194/mt on December 3 — a 3-month high — to $1,070/mt Tuesday, down 10.4%.
The weakness in isomer-MX was blamed on bearish downstream paraxylene and purified terephtalic acid markets as well as sluggish buying sentiment due to delayed startups of new PX plants in Asia.
TOLUENE’S FALL CURBED BY STRONGER DEMAND FROM TDP OPERATORS
Toluene, however, has been able to limit the fall mainly due to increasing demand to feed toluene disproportionation or TDP units to produce benzene, which has been bullish on high demand from the US, market sources said. TDP units produce benzene and MX from toluene and C9.
The fall in the FOB Korea benzene marker has also been limited over the same period, down 3.8% to $1,283.50/mt Tuesday from $1,334/mt on December 3, 2013, according to Platts data.
The Asian benzene/toluene spread on an FOB Korea basis was assessed at $213.50/mt Tuesday, indicating that the profit margin for TDP unit operators producing benzene out of toluene is around $153.5/mt. This spread hit a six-year and nine-month high of $247/mt on January 15.
TDP operators breakeven when the spread is around $60/mt, according to market sources.
Another reason of the relative firmer toluene market than isomer-MX was increasing demand for using it in gasoline blending.
“Due to stricter [environmental] regulations to curb the smog in China, toluene is preferred as a gasoline blendstock, as it generates less pollutants,” a trader said.
Source: Platts.com
