04 January 2006 04:48 [Source: ICIS news]
By Yeow Pei Lin and Clive Ong
SINGAPORE (ICIS news)--China should remain the main driver of aromatics in 2006, with its ability to absorb the new capacities around the region and at home likely to play a major part in determining the market’s direction.
Take toluene and isomer xylene. Reliance on arbitrage material from the
The major start-up of the year is SK Corp’s new reformer in the second quarter. Located at
"If the negotiations are successfully concluded, the buyers would have the flexibility to reduce their imports,'' said a trader.
Imports could also decline due to demand from US refineries for alternative octane boosters like toluene and isomer xylene, given that methyl tertiary-butyl ether (MTBE) will be phased out as a gasoline additive in 2006 due to environmental reasons.
Sellers and buyers, unsurprisingly, had differing views of the market.
The isomer xylene market should be more buoyant than the toluene sector due to demand from
Buyers, however, were less sanguine due to the start-up of several new plants in the second half of 2006. Apart from SK Corp's reformer, two aromatics facilities with a combined isomer xylene capacity of 290,000 tonne/year in
Importers were also uncertain about
"Demand has been disappointing in 2005, partly due to high international prices. We anticipate strong competition from other substitutes if the situation continues,'' said one source
There is a similarly mixed view of the benzene market. Some believe it is promising due to new downstream capacities - around 770,000 tonne/year of styrene monomer (SM) capacity came on stream in China in 2005, in addition to 900,000 tonne/year of phenol capacity in Northeast Asia. In 2006, CNOOC & Shell Petrochemical Co (CSPC) will start-up its 550,000 tonne/year SM unit at Daya Bay, Huizhou, Guangdong Province, in the first quarter of 2006.
This, however, will be countered by new benzene capacities from
That means the Asian benzene market will continue to be long in 2006, according to a trader. The spot Asia-US arbitrage window, which was largely closed in the second half 2005, will be crucial for benzene sellers to take the length out of the Asian bourse.
A broker based in
With benzene prices more than $300/tonne lower than SM for several months, it has been easier to trade it than the monomer, they added.
There will be several new SM facilities in
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