Traders in Asia failed to show much interest in taking advantage of the arbitrage window that is open on paper with the Asia-US isomer-grade mixed xylenes spread widening by $32.56/mt, or 72.1%, from Friday last week to $77.70/mt on Monday, Platts data showed.
There is no prospect of demand in the US rising in the near term, market sources said. "We have no plans for it [ship cargoes to the US] as we are not clear about the US balance [from November]," a South Korean trader said Tuesday.
Taking into account 45 days of shipping time, Asian MX would only arrive in the US at the end of October. After discharge and storage, which would take another couple of weeks, traders could be able to start selling their cargoes only in November and traders said there were no indications as to where prices would be by then, traders added.
"If US isomer-MX can continue to stay at high levels, maybe market participants who have US term cargoes will try to sell in the US market or skip their purchase for September and then short-cover in Asia," another South Korean trader said, adding that this would result in tightness in Asia pushing up isomer MX prices.
US isomer-MX soared to an all-time high of $4.55/gal ($1,383.20/mt) FOB US Gulf, on Monday, up 14 cents/gal, or 3.2%, from Friday.
Meanwhile, Asian isomer-MX edged up $10/mt day over the same period to surpass the $1,300/mt support level and hit $1,305.50/mt FOB Korea Monday.
The force majeure declared by BP and Total at their European plants recently prompted several shipments to be diverted to Europe from the US, leading to supply tightness in the US.
For parcel sizes of 5,000-12,000 mt, freight from South Korea to US Gulf is around $55/mt. This means that isomer-MX cargoes would reach the US at $1,360.50/mt, $22.70/mt cheaper than current US isomer-MX cargoes.
