The isomer-MX CFR Taiwan/FOB US Gulf spread flipped into negative territory on Thursday -- keeping the arbitrage firmly shut -- due to a supply shortage in Europe which is pulling cargoes from the US, Asia-based market sources said Friday.
Isomer-MX prices edged up $3/mt day on day to close at $1,284.50/mt CFR Taiwan at the 0830 GMT Asian close Thursday, while US isomer-MX prices jumped 7 cents/gal day on day to close at 427 cents/gal ($1,298.08/mt) FOB US Gulf Thursday -- putting the CFR Taiwan/FOB USG spread at minus $13.58/mt Thursday compared with $4.70/mt Wednesday.
It costs about $55/mt to ship an isomer-MX cargo from the US to Asia currently -- meaning the arbitrage is firmly shut.
The isomer-MX market in the US has been above the 410 cents/gal ($1,246.40/mt) support level since August 28, when the price spiked 25 cents/gal day on day to close at 421 cents/gal FOB US Gulf on plant shutdowns due to Hurricane Issac in the US Gulf Coast.
The price has been steadily rising, with Asia-based market sources saying that gains seen in the US market from Wednesday have been due to a pull on US cargoes from Europe.
In a rare move, BP was heard to have fixed Thursday a vessel to move 20,000 mt of isomer-MX from the US to Europe due to a shortage there. Isomer-MX from the US rarely moves to Europe, usually heading to Asia instead.
When contacted, BP declined to comment on the cargo movement Friday.
The reported fixture comes amid news of BP declaring a force majeure on purified terephthalic acid supply from its plants in Europe due to limited paraxylene feedstock, sources close to the company said Friday. (See story, 0334 GMT).
Details are not clear, but some market sources said that a shortage of isomer-MX in Europe has led to tightness in the downstream PX market there.
With the US isomer-MX market rallying overnight and the US-Asia arbitrage firmly shut, Asian isomer-MX was pegged at $1,279.50/mt FOB Korea and $1,294.50/mt CFR Taiwan mid-afternoon Friday, up $10/mt from Thursday's close.
