ExxonMobil may cut Singapore aroms output on poor margins

13 August 2010 10:59  [Source: ICIS news]

SINGAPORE (ICIS news)--Petrochemical major ExxonMobil may cut operating rates at its Singapore aromatics units soon on the back of thin margins, market sources said on Friday.

The spread between isomer-grade xylene (IX) and paraxylene (PX) was hovering around the $105/tonne (€82/tonne) mark on Friday, below the $150-180/tonne that typical PX makers in the region require to cover operational costs and break even.

Details of the extent of reduction in delivery volumes at ExxonMobil were not available at the time of writing.

The company was heard to have purchased a 5,000-tonne spot PX cargo for delivery to Ningbo, China that traders said would most likely be used to fulfil contractual obligations.

Sources involved in the August PX Asia Contract Price (ACP) negotiations said that ExxonMobil would be implementing some reduction in delivery volumes following a lower-than-expected settlement price of $890/tonne CFR (cost and freight) Asia.

"It is not our practice to comment on specific business decisions or the operational status of our facilities," said an ExxonMobil spokesperson when asked about the possible production cuts in aromatics.

"Nonetheless, we would like to emphasize that ExxonMobil is committed to meeting all our contractual obligations to our customers," the spokesperson said.

ExxonMobil operates two aromatics lines in Singapore - the Jurong Aromatics Plant (JAR) that produces 300,000 tonnes/year of benzene; 180,000 tonnes/year of toluene; and 400,000 tonnes/year of paraxylene (PX); and, the Singapore Aromatics Recovery (SAR) that can produce 190,000 tonnes/year of benzene and 420,000 tonnes/year of PX.

ExxonMobil is one of the three ACP-negotiating PX makers. The other two companies include JX Nippon Oil and Energy and Idemitsu Kosan.

($1 = €0.78)

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By: Bohan Loh
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