22 January 2013 11:29 [Source: ICIS news]
LONDON (ICIS)--European orthoxylene (OX) demand has so far failed to show any significant signs of recovery in 2013, sources said on Tuesday, but there are some concerns surrounding availability on the horizon.
January has seen some activity downstream spurred by inventory restocking, but many players agree that a true upturn in demand has so far failed to materialise.
Availability for downstream phthalic anhydride (PA) is good, owing to slow demand from the resin sector as well as imported flake volumes from Russia, and overall there is some bearishness for the near- to medium term.
However, one buyer did note that there is an uncertain outlook for production this year, with speculation that availability could become balanced to tight as dioctyl phthalate (DOP) production is phased out in Europe and producers export the feedstock to Asia to capitalise on demand there.
“It’s not clear whether the market will be short,” the buyer said, “but it certainly won’t be long.”
Asian OX prices have started to firm in January, with persistently tight supply and improving demand levels driving the upturn. Several players were said to be seeking cargoes in the market in an attempt to replenish diminished inventory levels before the impending Lunar New Year holidays.
European OX prices saw record highs in the first half of 2012, largely driven by production turnarounds.
Another potential influence on OX supply is the fortunes of its co-product, paraxylene (PX), for which global supply is predicted by some to tighten this year amid ramped-up derivative output in China.
OX is largely used in the production of PA and is generally extracted by distillation from a mixed xylenes (MX) stream in a plant primarily designed for PX production.
With a tighter global PX market, producers may opt to focus on higher PX yields over OX to meet the increased demand, to the detriment of OX availability.
Nevertheless, outlook for OX domestic demand from key markets such as construction and automotive is overwhelmingly pessimistic, and this continues to temper any bullish pricing outlook in the market.
($1 = €0.75)
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