26 July 2004 00:01 [Source: ACN]
THE shutdown of LG-Caltex Oil’s refinery on 19 July following labour problems gave fresh impetus to Asian aromatics spot prices. Bullish sellers raised offers for benzene, mixed xylenes (MX) and paraxylene (PX) immediately after hearing that the South Korean aromatics major had shut down its refinery, its 680 000 tonne/year benzene unit, and three PX plants with a total capacity of 1.2m tonne/year.
News emerged later in the week that LG-Caltex had restarted operations at one crude distillation unit with non-union labour. But a company source said no timetable had been set for a full restart, although the employees were doing their best to start production as soon as possible so that the company could take advantage of the high benzene and PX prices.
Benzene offers took a mighty leap of US$150/tonne to US$1160/tonne fob Korea on 21 July as nervous market players feared that LG-Caltex might not be able to meet a 10 000-tonne commitment to the US in August if the plant continued to be down. LG-Caltex had not declared force majeure on aromatics supplies at press time, although a company source said the possibility was being considered. A source close to LG-Caltex estimated that if the strike lasted for around 20 days, the market would be 50 000 tonne short of benzene.
And with US spot prices continuing to set a new record almost every day, traders remained keen on pushing product from Asia. Benzene prices in the US last week were at US$4.03-4.10/gal for July shipments, US$4.09/gal for August shipments and US$3.89/gal for September shipments.
Asian PX markets also reacted strongly, with prices rising by US$30/tonne to US$780/onne cfr NEA. If LG-Caltex is forced to shut its plant for around 20 days, the market would be short of nearly 88 000 tonne.
Price expectations for isomer- and solvent-grade MX as well as toluene also moved up (see page 25). The source close to LG-Caltex said the company would be receiving a 20 000-tonne parcel from the US at the end of July. It was likely to keep the material in its tanks and not sell it in the spot market.
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