08 April 1996 00:00 [Source: ACN]
ORTHOXYLENE cash margins are likely to stay higher for the rest of the decade than their 1990-94 average levels, according to forecasts by CMAI. However, the peak of 1995 at close to US$350/tonne in the US will not be repeated.
Demand will grow by 5%/year worldwide between 1995 and 2000 after stagnating in the early 1990s. Global operating rates are expected to average around 88% to 2000, up from the 85% of the first half of the decade, CMAI's Mary Blackburn said at the consultancy's recent World Petrochemical conference in Houston.
Asia Pacific OX contract prices are typically tied to the US contract price via an alpha which can be positive or negative. Asian contracts are expected to see an average 1-2 cent/lb alpha through to 2000, depending on when new Asian OX units come onstream. Blackburn's alpha forecast assumes freight rates between Asia and the US remain at US$60-65/tonne. As Asia moves towards self-sufficiency in OX trade, the Asian OX alpha is likely to decline.
Average US contract margins were 3-4 cent/lb between 1990 and 1994. 'With operating rates averaging some three percentage points higher in 1996 to 2000, we would expect the average OX margin to be about 5 cent/lb,' Blackburn said. 'This would render an OX contract price around 20 cent/lb.'
New capacity is being added fastest in Asia Pacific, and will bring the region close to balance. Regional operating rates have fallen sharply from over 90% last year to close to 80% this year, and are forecast to improve slowly in the next few years, regaining 90% again only in 2000.
Asia already accounts for more than one-third of global phthalic anhydride demand. Growth in phthalic consumption in the region is forecast at 6%/year between 1995 and 2000, driving OX demand.
Kohap started a 140 000 tonne/year OX unit early this year in South Korea. Yukong will follow suit with a 100 000 tonne/year plant in 1997, and Formosa will start its 100 000 tonne/year Taiwanese plant in 1999. Humpuss has announced a 40 000 tonne/year OX unit with its 370000 tonne/year paraxylene unit which Blackburn expects to start up in 1999. 'We would expect Asia Pacific to remain a slight net importer of OX or to become fairly balanced in the net OX trade area,' Blackburn said.
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