Aromatic petrochemical prices in Asia continued to climb on Monday as the markets reacted to developments in Japan following last week's earthquake and tsunami. Market participants were concerned that cuts in benzene production in the country could boost spot prices further.
Emergency shutdowns were carried out Friday at several aromatics plants across the quake-stricken northeast region. JX Nippon Oil & Energy shut its aromatics units and refineries at Sendai, Kashima and Negishi, which have a total benzene capacity of 425,000 mt/year.
At Sendai, JX Nippon operates a continuous catalytic reformer, which has a capacity of 30,000 b/d, while a sulfolane unit can produce 90,000 mt/year of benzene and 300,000 mt/year of mixed xylenes.
At Negishi, up to 145,000 mt/year of benzene can be produced from reformate while Kashima has a 190,000 mt/year benzene unit. Prior to the quake, the aromatics plants were running at 100% of capacity.
Another factor that could affect JX's operations is the closure of ports at Kashima and Sendai, key ports for crude and naphtha feedstock deliveries.
At Chiba, JFE Chemical shut its coal-based aromatics plant, which can produce 120,000 mt/year of benzene, following the quake. A JFE source was unable to provide further details of the shutdown as the company was still in the midst of assessing the damage caused to the facility.
But Idemitsu Kosan's benzene production at its Chiba plant was unaffected by the quake. The plant is able to produce 260,000 mt/year of paraxylene, 577,000 mt/year of benzene and 353,000 mt/year of mixed xylenes.
The Asian benzene price climbed $8.50 to $1,182.50/mt FOB Korea on Monday. The price was slightly below the US price Friday, which was assessed at $1,184/mt FOB USG.
The European benzene price fell to $1,224/mt CIF ARA on Friday. This morning in Europe March benzene was heard bid at $1,255/mt and offered at $1,275/mt CIF ARA. April benzene in Europe this morning was heard bid at $1,250/mt and offered at $1,270/mt CIF ARA.
The Asian toluene price climbed $14 on Monday to $1,050.50/mt FOB Korea despite weaker naphtha prices. Sources said the numerous aromatics outages in Japan were pushing prices higher.
Traders in Asia noted that the quake's impact on toluene would likely be less significant compared with other aromatics, as most of the plants that have been shut do not produce toluene.
But despite a fairly consistent supply situation, some traders felt toluene prices could firm on higher downstream demand.
"Paraxylene prices fly, mixed-xylene prices fly, if C2 is short, styrene monomer prices go up then it will push benzene and toluene disproportionation operations will run," said a trader.
Firm downstream product prices could also delay near-term planned turnarounds, boosting demand for toluene in the spot market, said sources. The Asian price on Monday was assessed nearly flat to the European assessment from Friday. The US price was the highest globally at $1,082/mt FOB USG.
The Asian isomer-grade mixed xylenes market spiked to $1,147.50/mt FOB Korea, up $57 from Friday following a surge in downstream paraxylene values.
PX prices climbed 6.6% on Monday. Xylene was scrambling to secure April and May cargoes just as the industry was trying to assess the extent of the damage caused by Friday's earthquake in Japan.
According to a Chinese trader, the impact of Friday's disaster in the domestic Chinese isomer-MX market is minimal as the inventory level is at a peak.
"The MX market faced relatively smaller impact," the trader said. The US mixed xylene price was assessed just below $1,100/mt FOB USG on Friday. Asian paraxylene surged $110 or 6.6% Monday to close at $1,781.50/mt CFR Taiwan/China as offers evaporated.
Prices climbed amid talk of JX Nippon Oil and Energy declaring force majeure on its paraxylene production following last Friday's quake.
But JX Nippon's customers said they had yet to receive official notice of any production cuts.
Since last Thursday, PX has risen $161.50/mt or 10%, with more upside expected.
Traders were extremely concerned about the sharply decreasing supply due to production cuts as well as logistics issues as some Japanese ports were closed or only partially open. But downstream purified terephthalic acid shrugged off any increase in PX and was up only $2 at $1,500/mt CFR China Monday for Taiwan origin cargoes.
PTA makers in China were more concerned about downstream polyester plants not able to absorb rising costs and hence were conservative in raising their prices.
The US paraxylene price climbed to $1,767.50/mt FOB USG on Friday.
The European PX price was assessed at $1,781/mt FOB Rdam on Friday.
The climbing toluene and xylene prices in the US to end last week -- coupled with a drop in gasoline blend values -- widened the delta between blend values and the US toluene price to near 22 cents/gal. The US gasoline blend value for toluene and mixed xylene was at 334 cents/gal [$1,013.50/mt] on Friday.
The US toluene price climbed on Friday to 356 cents/gal FOB USG.
The US mixed xylene price was assessed Friday at 363 cents/gal FOB USG.
