Asia isomer-grade xylene falls 6%, may extend slide - sources

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) Asia at the close of business on Tuesday, according to global chemical intelligence service ICIS pricing.

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.

Buying appetite for IX could further decline in the weeks ahead given outages at regional PX plants and impending maintenance turnarounds at others, the trader added.

($1 = €0.70)

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