The spread between US and Asia isomer-grade mixed xylenes prices widened to $128.44/mt late Thursday, the widest since 2009, Platts data showed.
US MX prices jumped Thursday on the back of tight supply for balance May and June amid high blending values for MX -- ahead of the driving season in the US more isomer-MX is used for gasoline blending -- leading to the spread being pulled further apart.
Bids were heard at 410 cents/gal ($1,246/mt) FOB US Gulf Thursday while a trade was heard at 416 cents/gal ($1,265/mt) FOB USG, but no further details could be confirmed.
"I heard that the deal was done due to short covering," a South Korean trader said.
An Asian trader pointed out that supply is "tight [in the US] for front month due to blending values, and front [month] good quality MX is tight."
On the other hand, Asian isomer-MX prices have been on a downtrend since early May due to a bearish downstream paraxylene market.
US MX prices spiked by 26 cents/gal ($79/mt) or 6.8% day on day to 411 cents/gal ($1,249.44/mt) FOB USG Thursday, while isomer-MX slipped $6.50/mt to $1,121/mt CFR Taiwan, stretching the spread to its widest point since 2009.
The US-Asia isomer-MX arbitrage has been shut since late March, but the flipping of the spread from negative to positive early May as well as the extension of the spread has ensured that the arbitrage will be firmly shut for a while, market sources said. Based on Thursday's prices, US MX will cost about $1,319.44/mt in Asia -- after taking into account of freight of $70-80/mt -- $198.44/mt higher than the Asian isomer-MX price.
The US-Asia spread flipped from negative to positive May 10, taking away any arbitrage opportunity, and following that Asian MX prices continued to dive while US MX prices fell but found a bottom at 375 cents/gal FOB USG early May.
A few Asian traders, however, said they were still being offered spot MX cargoes by Western traders. "These [are likely] the back-end cargoes," which were fixed much earlier, one of the traders explained.
