The price difference between the two grades of mixed xylenes in China's domestic market has widened to Yuan 1,300-1,700/mt on extremely tight isomer-MX supply, said market sources Monday.
The normal price spread between isomer-grade MX and solvent-grade MX is usually around Yuan 200-500/mt.
"[The usual spread is] Yuan 500/mt. It [the current spread] is very crazy and totally exceeds my expectations. There are no [isomer-MX] cargoes now," said a local Chinese trader.
Domestic isomer-MX prices were boosted by tight supply since October 10, when the market resumed operations in China after a week-long holiday, due to tight isomer-MX supply even as solvent-MX prices slipped due to the start of the off-peak season for the solvents market.
Domestic isomer-MX prices in East China were Yuan 10,500-11,000/mt ex-works Monday, which is equivalent to $1,383-1,449/mt on an import parity basis while domestic prices for solvent-MX were Yuan 9,200-9,300/mt.
China traders said it was extremely difficult to find isomer-MX cargoes in China now due to production cuts by Fujia Dahua and higher captive consumption rates at Sinopec. "There is a shortage of cargo as no one is keeping inventory. Thus, when there is some demand, we cannot find any seller. This is an abnormal situation," said another local Chinese trader.
South Korea exported 35,611 mt of isomer-MX in September into China, up 42.3% from a month earlier. But despite the apparent increase in isomer-MX shipments into China, traders are expecting a ease of isomer-MX supply in the domestic market this week.
Imported cargoes are usually stored in bonded warehouses and traders want to export these cargoes out of the country on the back of lower domestic isomer-MX prices.
But the latest spate of bullish domestic isomer-MX market had spurred traders to supply these bonded cargoes into the domestic market, but that entails administration work which takes at least 10 days.
"No one expected domestic isomer-MX prices to be so high. Bonded cargoes need 10 days to be converted into domestic cargoes," said a local Chinese trader.
