The price spread between Asian paraxylene and isomer-grade mixed xylenes narrowed $19/mt Monday from Friday's level, to $173/mt, a one year-low, as MX was strengthening amid a bearish PX market, Platts data showed.
Isomer-MX on an FOB Korea and CFR Taiwan basis rose $13/mt day on day to $1,210.50/mt and $1,232.50/mt, respectively, Monday. PX, however, fell $6/mt over the same period to $1,381.50/mt FOB Korea and $1,405.50/mt CFR Taiwan/China, pressured by a bearish US PX market.
The isomer-MX market was getting its support from tighter supply due to plant turnarounds in Japan and South Korea, as well as the closed US-Asia arbitrage, market sources said.
In Japan, Cosmo Oil shut its 300,000 mt/year isomer-MX plant at Yokkaichi in October for a 30-day turnaround, Platts previously reported.
South Korea's SK Energy shut its 500,000 mt/year isomer-MX plant at Incheon for scheduled maintenance from late September to early November.
Japanese-origin isomer-MX accounts for 25% of total Asian supply of about 800,000 mt to 1 million mt a year, sources said. South Korean-origin isomer-MX also accounts for 25%, they added.
The US-Asia isomer-MX arbitrage was shut on paper on August 13 after being open for about a month, hit by higher US prices. At the time, the isomer-MX spread between CFR Taiwan and FOB USGC was $48.64/mt.
The arbitrage has been shut since then. For the arbitrage economics to work, the Asia-US spread must be above $85/mt, based on a discounted term charter freight rate from the Gulf Coast to South Korea or Taiwan. Spot freight rates for these routes are currently at $95/mt for a 5,000-mt BTX cargo, according to Platts data.
Meanwhile, the bearishness of the PX market has been blamed on the non-settlement of the November Asia Contract Price. Typically, if no settlement is reached, ACP sellers need to sell their term cargoes in the spot market.
There are four ACP sellers in Asia: ExxonMobil, Japan's Idemitsu Kosan and JX Nippon Oil and Energy, and South Korea's S-Oil. There are six ACP buyers: BP, Taiwan's Capco, Oriental Petrochemical (Taiwan) Corp., Japanese companies Mitsui Chemicals and Mitsubishi Chemical, and China's Yisheng Petrochemical.
Sources close to the negotiations said Japan's JX ended its November PX ACP negotiations without settlement, after reducing its nomination to $1,400/mt CFR from $1,470/mt CFR.
ExxonMobil and Idemitsu reduced their November nominations to $1,420/mt CFR and $1,460/mt CFR, respectively.
The October PX ACP negotiations ended with a major settlement at $1,470/mt CFR.
Asian PX prices were also dragged down by the FOB USG PX price, which sank $5/mt day on day to $1,285.50/mt Monday. The price decline in the US is due to ample supplies, sources said. The arbitrage from the US to Asia was wide open currently and more US cargoes are seen to be coming to Asia, sources added.
