The arbitrage window to send US isomer-grade mixed xylenes into Asia has been open in paper since Tuesday, and at least one deepsea October arrival cargo was sold into Asia, said market sources Thursday.
On Tuesday, isomer-MX FOB Korea and CFR Taiwan benchmarks were assessed at $1,298.50/mt and $1,309.50/mt, respectively, while US MX was at 410 cents/gal FOB US Gulf, or $1,246.40/mt FOB US Gulf.
At these levels, US MX can be sold into Asia at $1,301.40/mt, taking into account US-Asia freight of $55-60/mt.
The US-Asia isomer-MX price spread widened to minus $87.90/mt Wednesday, as Asian isomer-MX surged by $36-40/mt to $1,334.50/mt FOB Korea and $1,349.50/mt CFR Taiwan, in tandem with bullish downstream paraxylene.
PX surged $83.50/mt Wednesday from Tuesday, on concerns of tight September supply.
Despite the arbitrage opening just two days ago, a trader had already bought at least 5,000 mt of US isomer-MX for October arrival into Asia, said market sources. But others were cautious about buying for October, as market conditions remain uncertain following the recent volatility in crude.
DOWNSTREAM OX NOT FOLLOWING SUIT
Meanwhile, firmer feedstock isomer-MX prices in Asia has not led to a corresponding rise in orthoxylene values, as OX was badly affected by a weak downstream phthalic anhydride market. Typically, OX producers require an OX-MX spread of $100-$150/mt to break even.
Domestic East China OX prices were down by at least Yuan 300-400/mt Wednesday from a week ago to Yuan 10,200-10,300/mt, or $1,335-$1,349/mt on an import parity basis.
Platts assessed OX at $1,358/mt FOB Korea on August 12, and with FOB Korea isomer-MX at $1,334.50/mt Wednesday, the OX-MX spread was at $23.50/mt.
A South Korean OX producer was mulling cutting OX production rates from 50-60% to below 50% in coming weeks.
