FocusMX makers lower op rates on feedstock costs

18 December 2007 06:34  [Source: ICIS news]

By Mahua Chakravarty

SINGAPORE (ICIS news)--Producers in South Korea and Japan are mulling cutting isomer grade xylene output on the back of high feedstock costs and poor downstream paraxylene (PX) market conditions, producers and traders said on Tuesday.

Producers like GS Caltex, Nippon Oil and Japan Energy were reported to have cut back rates due to poor economics.

Nippon Oil had shut one of the two reformers at the Sendai-based facility from 1 December due to thin margins, a source close to the company said.

The plant, which produces about 200,000 tonnes/year of mixed xylenes (MX), uses heavy naphtha as the feedstock for producing benzene and isomer grade xylene.

The estimated loss of production due to this shutdown was about 10,000-20,000 tonnes, he said.

No details were available regarding the restart date.

“Restarting of the unit would depend on the margins,” said the source.

GS Caltex had shut down its toluene disporportionation (TDP) unit earlier as high toluene prices had cut into production margins.

The TDP unit produces around 100,000 tonnes/year of isomer grade xylene.

No officials were available for comment from Japan Energy.

Poor downstream PX market condition and cutback in operating rates of some PX units in Korea, Japan and Taiwan had also affected demand for isomer grade, traders and producers said.

South Korea’s KP Chemical, Asia’s largest buyer of isomer grade xylene, had idled a unit due to squeezed margins.

But poor margins due to high feedstock costs was cited as the main reason for the production cuts and shutdowns.

Production margins of aromatics producers have been eroded in the past weeks on the back of rallying crude and naphtha values, said traders.

Naphtha values, which were at $879-882/tonne CFR (cost and freight) Japan on Tuesday morning, were only about $41-82/tonne lower than isomer grade prices.

A spread of about $150/tonne is considered as the variable cost of production for benzene, toluene and xylene.

Isomer grade prices were notionally assessed at about $920-940/tonne FOB (free on board) Korea. No indications surfaced on Tuesday, according to global chemical market intelligence service ICIS pricing.

By: Mahua Chakravarty
+65 6780 4359

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