28 May 2009 23:12 [Source: ICIS news]
HOUSTON (ICIS news)--Recent capacity curtailments by North American paraxylene (PX) producers have stablised the market, sources said on Thursday.
But with June contract negotiations looming, conflicting PX pricing factors have reduced foresight for where the benchmark price might go.
PX inventory was long last year, but recent production pullbacks have narrowed supply in the market.
"It takes us closer to being balanced," a producer said about the supply-demand dynamic in the North American market.
BP adjusted operations to match reduced customer demand at its PX plant in Decatur, Alabama, as well as at Texas City, Texas, the company said.
Spokesman Scott Dean would not disclose the specific amount of capacity taken off line, but reports said around 600,000 tonnes/year of PX have been brought down at the two plants.
BP's purified terephthalic acid (PTA) facility in Cooper River, South Carolina, has also suspended some output as a result of reduced PX production, Dean said.
An ExxonMobil spokesman said on Thursday that its 270,000 tonne/year PX unit at the Chalmette, Louisiana, refinery is fully operational, but industry sources said the chemical giant had reduced output over the past few months.
In addition to the three US PX facilities, a source said Petroleos Mexicanos (Pemex) cut run rates at its 250,000 tonne/year PX plant in Mexico.
The tightness in North America could bring higher pricing, but a lack of demand in the region and a recent slowdown in Chinese production has lowered spot price ideas in the US Gulf (USG).
USG spot PX was valued at 45-47 cents/lb ($992-1,036/tonne, €714-746/tonne), according to data from global chemical market intelligence service ICIS pricing.
The price assessment for USG PX peaked at 51 cents/lb two weeks earlier.
Contrary to the soft demand for PTA, June nominations for the PX Asian contract price (ACP) have been proposed at $130, $140 and $160/tonne higher than May levels.
A North American producer said margins had crept up in early May but tapered off at the end of the month with rising feedstock prices.
"We're coming back to being very neutral," the producer said.
Reformulated gasoline blendstock for oxygenate blending (RBOB) settled on Thursday at $1.9105/gal on the NYMEX, a gain of 1.88 cents from a day earlier and 11.08 cents from a week ago.
But offsetting the raw material prices is the hollow demand in a North American market that a producer said is in a lull.
The clash of PX price indicators could result in a rollover from May's mark of 49.50 cents/lb, said a source, who is not a participant in US contract settlements,
Major US PX producers include ExxonMobil, BP, Chevron Phillips Chemical and Flint Hills Resources.
($1 = €0.72)
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