19 March 2013 06:00 [Source: ICIS news]
By Hazel Kumari
SHANGHAI (ICIS)--Isomer-grade xylene prices in Asia continued their downtrend for the third week running as a result of oversupply and weak demand in the downstream paraxylene (PX), purified terephthalic acid (PTA) and polyester sectors, industry sources said on Tuesday.
Isomer-grade xylene prices declined to $1,228-1,224/tonne (€946-943/tonne) FOB (free on board) Korea from $1,308-1323/tonne FOB Korea on 18 March from 1 March.
During the same period, prices for PX and PTA fell from $1,585-1,590/tonne FOB Korea to $1,500-1,505/tonne FOB Korea and $1,149-1,164/tonne CFR China Main Port (CMP) to $1,100-1,110/tonne CFR CMP respectively.
The surplus of cargoes was a result of several traders taking long positions, purchasing several January and February loading shipments in anticipation of South Korean’s Hyundai Cosmos (HC) Petrochemical’s new PX plant in Ulsan starting commercial operations.
The company started operations in early January and achieved on-spec production on 7-8 January.
However, HC Petrochemical procured its feedstock through contracts from other suppliers, thus leaving traders with long positions scouring for buyers or rolling over their cargoes from month to month.
As a result, storage tanks in South Korea were heard to be at very high levels with mixed xylenes, while some tanks simply had no more room.
Consequently, several traders requiring extra tank space were turned down.
Similarly, in China storage tanks were full as well.
‘The tank levels for mixed xylenes in China was heard to be at around 80,000 tonnes, (with about 40% of that being isomer-grade xylene), and tank operators said there is very little space to take in more cargoes,” a China-based trader said.
“Currently, some of the Chinese PX makers have reduced their operating rates to 50-70%, with a handful running at lower rates. The expansion of PTA makers in China has resulted in an abundance of PTA material available, causing PTA prices to remain weak.
“With the current uncertain economic situation in Europe, US and China, [derivative] polyester makers are finding it harder to sell their inventories in the export market, hence the lack of buying interest for [feedstock] PTA,” he added.
PX players are sitting on0 comfortable-to-hgh inventory levels and taking a wait-and-see approach, anticipating further drops in prices.
Some players are optimistic that the market will rebound when major producers, JX Nippon and GS Caltex, shutdown for 45-50 days maintenance in mid-March, tightening the availability of isomer-grade xylenes.
On the other hand, some players think the shut downs will not impact the market, taking in consideration the surplus supply amid weak PX, PTA and textile sectors.
($1 = €0.77)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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