South Korea's HC Petrochem is seeking a term contract to buy isomer-grade mixed xylene from a South Korean producer for its new paraxylene plant in Daesan, a company official said Monday.
There are two isomer-MX producers in South Korea -- GS Caltex and SK Innovation.
HC Petrochem, a 50:50 joint venture between Hyundai Oilbank and Japanese Cosmo Oil, expects to begin commercial operations at the aromatics plant early next year. The plant will be able to produce 800,000 mt/year of PX, 115,000 mt/year of benzene and an unspecified volume of by-products. Isomer-MX is the main feedstock for producing PX.
Platts previously reported that HC Petrochem was seeking a term supply contract with Cosmo Oil for 70%, or 672,000 mt/year, of its isomer-MX requirements.
Market sources estimated HC Petrochem would require 960,000 mt/year of isomer-MX to produce 800,000 mt/year of PX, assuming it operated at 100% capacity.
The sources said that HC Petrochem was recently heard to have approached a South Korean isomer-MX producer and discussed an annual term contract. "Currently, another term contract for the remaining 30% [288,000 mt/year] of isomer-MX is under consideration," another company source said.
Meanwhile, sources said that if HC Petrochem stuck with the Cosmo Oil deal, at least 237,000-324,000 mt/year of isomer-MX would have to come from the spot market.
The sources said that Cosmo Oil would have to buy some isomer-MX from the spot market as one of its MX plants will be shut till next July. "Cosmo Oil will be able to provide a maximum 240,000-300,000 mt/year of isomer-MX from the plant in Yokkaichi, Japan, assuming 80-100% capacity. But as Cosmo Oil's other MX plant in Chiba will be shut until July 2013, it will be able to provide a maximum 108,000-135,000 mt/year of isomer-MX next year, assuming 80-100% capacity," a South Korean trader said.
"Also, if HC Petrochem cannot find another term supplier [besides Cosmo Oil], or the operation rates of Cosmo Oil's MX plant is lower than 80%, the company would likely have to buy a larger amount of isomer-MX in the spot market," another trader said.
Meanwhile, HC Petrochem has confirmed that full amount of isomer-MX needed for test runs, expected over November-December 2012, will be procured from Cosmo Oil.
