02 September 2009 07:31 [Source: ICIS news]
SINGAPORE (ICIS news)--Asian isomer-grade xylene (IX) may continue to fall after shedding as much as 6% on Tuesday due to weakness at its downstream paraxylene (PX) market, market sources said on Wednesday.
Spot prices of Asia IX fell $35-50/tonne (€24.50-35/tonne) to around $790-825/tonne CFR (cost and freight) NE (northeast) ?xml:namespace>
Plunging PX values, which were down to a 10-week low of $960-970/tonne CFR Taiwan on the same day, triggered a panic sell-down among regional IX traders, market sources said.
“My buyers are now asking for cargoes below $800/tonne CFR China/Taiwan. Sentiment is really becoming weaker these days,” said a northeast Asian IX producer.
Almost all IX production goes into the manufacture of PX.
A major Chinese buyer who was seen earlier in the week hunting for cargoes priced between $830-840/tonne CFR China had gone into the sidelines to watch price trends, the producer said.
Influx of competitively priced deep-sea IX parcels from the US dampened buying quotes for Asian cargoes, which were around $840-850/tonne CFR NE Asia late last week, market sources said.
The decline in IX prices, however, failed to widen the IX-PX spread enough for PX producers to make margins. PX values, at any given point, should be $200/tonne higher than IX for PX makers to break even.
“IX prices have to fall further or else PX producers are going to cut operating rates soon,” said a northeast Asian trader.
PX producers had enjoyed around $270/tonne profit margin in May but this has significantly declined to $20/tonne by end-August.
($1 = €0.70)
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