The Asian paraxylene market flipped into contango Monday -- the first time in six months -- as spot supply started building up amid thin demand for prompt February cargoes ahead of the Lunar New Year holidays.
The CFR Taiwan/China PX price for second-half February was assessed at $1,333/mt and at $1,335/mt for H2 March, putting the market structure at minus $2/mt. The last time the market was in contango was on July 1, 2013, at minus $2/mt, Platts data showed.
Market sources said spot supply for February-delivery cargoes was seen as heavy because of scarce buying interest from Chinese PX end-users ahead of the week-long Lunar New Year holidays from end-January.
"There is still a lot of spot cargoes available in the market for February. It is difficult to find buyers for February cargoes because of the holiday season," a trading source noted.
Further out for March, the startup of new downstream purified terephthalic acid plants in China is expected to alleviate the overhang in supply.
"PX demand is seen to be higher for March compared to February. So PX sellers are not desperate to sell their March cargoes yet," the same source said. China's Shenghong plans to start up its new 1.5 million mt/year PTA plant in Jiangsu over March-April, while Xianglu Petrochemical's new 4.5 million mt/year PTA plant in Xiamen is due to come onstream by March.
As of early Tuesday, outright prices in the Asian PX market were stable from Monday's close, keeping the contango structure at $2/mt.
