US mixed xylenes, PX to land in Asia in May despite closed arbitrage

21 March 2012 05:50  [Source: ICIS news]

SINGAPORE (ICIS)--US-origin isomer-grade xylene (IX) and paraxylene (PX) cargoes are expected to reach Asian ports in May despite a closed arbitrage window between the US Gulf (USG) and Asia, according to shipping data and trading sources on Wednesday.

There are two traders who are expected to load 15,000-20,000 tonnes of PX in April, bought at $1,577.50/tonne (€1,199/tonne) FOB (free on board) USG late last week.

Spot PX prices in Asia stood at $1,622/tonne CFR (cost & freight) Taiwan and/or CMP (China Main Port) for the week ended 16 March or at a $44.50/tonne differential to the PX prices in the US.

The freight charges for a 10,000 tonne cross-Pacific shipment are at around $90/tonne.

A cargo of 20,000-30,000 tonnes of IX that is destined for Asian ports is expected to be loaded in March-April.

Spot IX prices in the US were at $1,364/tonne FOB USG on 16 March, while Asian prices stood at $1,342.50/tonne FOB Korea and $1,352.50/tonne CFR northeast (NE) Asia on the same day.

Sources attributed this trade flow to tight IX supply and a previously bullish buying sentiment towards Asian spot prices.

“A trader sold some March-April deliveries to FCFC ([Formosa Chemicals and Fibres Corp] at the end of February on a floating basis and the market became so tight that traders had no choice but to source shipments from the US,” according a northeast Asia-based trading source.

However, spot PX and IX prices in Asia have dropped by $81/tonne and $72.50/tonne since 29 February to $1,537.50/tonne CFR Taiwan and/or CMP and $1,332.50/tonne CFR NE Asia on 20 March.

The decline is a result of falling purified terephthalic acid (PTA) futures traded on the Zhengzhou Commodity Exchange and poor demand for polyester yarns and filaments.

($1 = €0.76)

By: Bohan Loh
+65 6780 4359

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