The US-Asia isomer-grade mixed xylenes arbitrage window closed on paper Friday, with the US-Asia MX spread crunching $51.52/mt, or 53.4%, from a day earlier to $44.94/mt, Platts data showed.
The arbitrage was open since May 24, with the US-Asia MX spread assessed at $128.44/mt, on bullish demand for prompt MX cargoes in the US and poor macroeconomic sentiment in Asia.
Asia is typically a net importer of isomer-MX with its main supply coming from the US. But with the US-Asia MX spread widening to a 44-month high over the first week of June, market participants were exploring the option of shipping Asian isomer-MX cargoes to the US.
Western traders were seen active in the Asian isomer-MX market with Tricon Energy buying a July cargo from Trammochem on June 6 at $1,023/mt FOB Korea.
US MX prices have tumbled for the past week with prices assessed at 361 cents/gal ($1,097.44/mt) FOB US Gulf Friday, a massive plunge of 13 cents/gal, or 3.5%, from a day earlier due to weak demand. Week on week, US MX prices nosedived 34 cents/gal or 8.6%.
Prompt demand from US blenders diminished at the end of last week when blend values were at a discount to spot values, which withdrew support for MX and toluene prices in the US, market participants said.
The blend value -- the value that refiners put on MX as a blending component -- is often considered a price floor for spot toluene and mixed xylene, sources said. So when spot toluene and MX fall below the blend value, demand generally picks up as blending for high octanes with toluene and MX into gasoline becomes profitable, according to industry sources.
Meanwhile, Asian isomer-MX prices rose $12/mt from a day earlier and $22/mt week on week to $1,052.50/mt CFR Taiwan Friday, boosted by firm downstream paraxylene market.
Based on Friday's prices, Asian MX will cost about $1,102.50/mt in the US -- and after taking into account freight of $50/mt -- $5.06 higher than the current US MX price, so the US-Asia MX arbitrage is firmly closed.
