The spread between paraxylene and feedstock isomer-grade mixed xylene in Asia has reached its lowest level in eight months due to increased demand for MX for gasoline blending and sluggish PX demand, market sources said.
The spread shrunk $1.67/mt day on day to $172/mt Thursday, the lowest since August 31 last year when it was $171.67/mt. Isomer-MX was last assessed at $807/mt FOB Korea, while PX was at $979/mt CFR Taiwan/China.
A Northeast Asian PX producer said the narrowing spread was "worrying" but it was not slim enough to require production cuts. A separate producer said the spread would have to go below $140-$150/mt before PX producers would consider run cuts.
"Recently gasoline blending [demand] is good both in China and in the US, and toluene disproportionation rate is decreasing [...] due to high toluene and low benzene," a Northeast Asian trader said Friday, explaining why MX prices have been supported recently. Isomer-MX, along with benzene, is the end-product made by TDP plants, and it can also be used for gasoline blending.
The trader also said PX has new production capacities starting in Asia in the second quarter, while the majority of PX plant maintenance shutdowns in South Korea are coming to an end.
Chinese PX producer Fuhaichuang, formerly known as Dragon Aromatics, is expected to restart its operation in the third quarter, possibly adding more demand for MX, and more supply of PX, the trader pointed out.
Meanwhile, the benzene-toluene spread has narrowed to $82.67/mt as of Thursday, with benzene at $836.67/mt FOB Korea and toluene at $754/mt FOB Korea, S&P Global Platts data shows. The last time the spread was lower was March 23, 2017, at $77/mt. The spread hit a year-to-date high of $207.83/mt January 19.
