After hitting an eight-month low on March 28, Asian isomer-grade mixed xylenes have seen a marked rebound as bargain hunters returned to the market and the downstream paraxylene sector showed signs of rising demand.
From $1,119.50/mt FOB Korea and $1,129.50/mt CFR Taiwan on March 28 following a fall in PX and purified terephthalic acid prices, isomer-MX has gained about $76.50-78.50/mt to hit $1,196/mt FOB Korea and $1,208/mt CFR Taiwan on Monday, Platts data showed.
Market participants are, however, cautious about the rebound, expressing uncertainty over whether the market has bottomed out. "We can say the worst phase is over, with buying activity coming back and inventories being consumed now," a trader said Monday.
The upcoming maintenance season for Japanese and South Korean isomer-MX plants and the closure of the US-Asia arbitrage window on paper indicates that the market is likely to see some stability now.
Asia could be looking at a shortfall of around 60,000 mt/month of isomer-MX from June as Japan's integrated refineries shut for maintenance from May.
South Korean GS Caltex's No.2 aromatics plant at Yeosu, which was shut mid-March for maintenance, will remain closed till mid-April. SK Global Chemical plans to carry out maintenance at three of its four reformers at Ulsan in the middle of May.
The rollover fee charged by producers for retaining cargoes in their storage for March to April and April to May cargo was around $20/mt on high inventories, which is considered a high level, but for May to June it is around $10-15/mt, market sources said Tuesday. This is also an indication that the market may be improving, they added.
But there still remains some uncertainty due to fluctuating downstream PX and PTA markets. "Unless, the Chinese polyester market is revitalized in the longer term, a further drop in the price of isomer-MX is possible and even if the price rises, the increase will be limited," a trader said Tuesday.
"Bottoming out doesn't mean that the isomer-MX market is likely to be bullish from now on as it hinges on the downstream PX and PTA markets," another trader said.
"Considering the current PX-MX spread of $250-260/mt, there is limited room for isomer-MX prices to rise," said another trader based in Singapore.
