Singapore — The FOB Korea price spread between isomer-grade mixed xylenes and feedstock toluene is near a two-year high amid stronger isomer-MX and paraxylene prices in Asia, S&P Global Platts data showed.
Toluene was last assessed at $788/mt FOB Korea and isomer-MX at $895/mt FOB Korea on Tuesday, resulting in a spread of $107/mt. The spread was last wider at $109.50/mt on August 16, 2016.
The spread has widened on the back of tight supply and firm demand for both isomer-MX and its main downstream product paraxylene.
There is currently a major turnaround at a large MX plant in Japan, reducing supply of the product. Taiyo Oil shut its 700,000 mt/year Kikuma MX plant early June for three months of maintenance, Platts reported earlier.
"Economics of the whole polyester chain is so healthy now, looks like it already divorced with crude oil and naphtha," a trader in northeast Asia said Wednesday, referring to the polyester chain of products starting with MX and PX and linking further downstream to purified terephthalic acid and polyester.
At the end of last week, spot PTA prices in China hit a near four-year high, supported by tight supply and surging raw material cost, Platts reported earlier.
Toluene is used as a feedstock to produce isomer-MX and benzene in toluene disproportionation units, and the wider spread between MX and toluene has helped some producers' margins. For example, a northeast Asian TDP producer said earlier this week that the operating rate of the company's plant had recently been raised to 80% of capacity in August from 70% in June-July.
With both MX and toluene also being imported for gasoline blending and solvents production in China, MX is currently proving to be the more costly alternative. In addition, the weakening of the Chinese yuan has made the imports less attractive economically to spot buyers, market sources said this week.
The East China ex-tank price of isomer-MX was at Yuan 6,700-6,720/mt on Tuesday, or about $826.30/mt on an import parity basis, far below international trade levels. The domestic price of toluene was last assessed at Yuan 6,510/mt on Tuesday, or about $800.90/mt on an import parity basis.
