12 April 2011 06:13 [Source: ICIS news]
By Bohan Loh
SINGAPORE (ICIS)--Spot paraxylene (PX) prices in Asia are under strong downward pressure with a flood of supply seen hitting the market in May, market players said on Tuesday.
“Sentiment is weaker than before now due to S-Oil’s new plant, the restart of CNOOC-Kingboard and lifting of the force majeure (FM) by JX Nippon Oil & Energy,” said a key northeast Asian producer.
Offers for May deliveries are at around $1,630-1,635/tonne (€1,125-1,128/tonne) CFR (cost and freight) ?xml:namespace>
PX prices have fallen nearly 10% since mid-March, when it reached a record high of $1,815/tonne (€1,252/tonne) CFR (cost & freight)
Supply will get a boost from
Meanwhile, Japanese aromatics major, JX Nippon Oil & Energy, is expected to resume 100% delivery of contracted PX volumes in May, although its available spot material will likely remain limited.
In line with falling spot prices, premiums for spot cargoes that are traded on a 50% Asia Contract Price (ACP) plus 50% spot average of published CFR Taiwan prices have dropped to around $4-5/tonne on 11 April, from as high as $20-22/tonne in mid-March.
The May/June inter-month swap was discussed at parity early on Tuesday, underscoring the bearish sentiment for the May delivery month. The second-half April/May inter-month swap was last valued by traders at a $5-10/tonne backwardation last week.
“End-users are typically in no rush to buy additional spot cargoes as they expect sufficient contract volumes to be delivered in May and June,” said a Singapore-based trader.
But PX prices may be supported at above $1,550/tonne CFR Taiwan and/or CMP market by firm values of downstream purified terephthalic acid (PTA).
Benchmark PTA duty-exempt prices were at $1,440-1,458/tonne CFR CMP on 11 April, according to ICIS data.
“PTA makers are still enjoying margins over $250/tonne. They will jump at any opportunity to buy PX around $1,600/tonne CFR,” said another northeast Asian player.
PX is the main raw material for PTA, which goes into polyester production.
PX prices are expected to remain under downward pressure until July, when demand should improve with the expected start-up of Zhejiang Yisheng Petrochemical’s new 1.5m tonne/year PTA project, market sources said.
($1 = €0.69)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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