Asia awash with aromatics

By Malini Hariharan

Excess availability of product continues to trouble Asian aromatics markets. Commissioning of new plants and reluctance to cut operating rates has resulted in a steady build up of stocks over the last few months.

Take the case of paraxylene (PX). The spread between naphtha and PX prices has been running below $250-300/tonne, which is usually needed to cover operational costs. But margins for producers integrated to purified terephthalic acid (PTA) have been positive. And it has made sense to operate PX units linked to refineries because of strong reformer economics.

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At today’s ICIS Asian Aromatics webinar, Bohan Loh, ICIS pricing editor for PX and mixed xylenes, estimated that South Korean PX plants ran at 95-100% in July. Elsewhere in the region operating rates were in the 80-95% range with minor cutbacks only at some plants in China and Southeast Asia.

The market is also seeing volumes flow from 4.52m tonnes/year of new PX capacity commissioned in 2009 (2.9m tonnes/year in China and 1.62m tonnes/year in the Middle East).

In benzene, growing supply in the China market is a key concern, pointed out Mahua Chakravarty, ICIS pricing editor for BTX.

China’s dual role as an importer and exporter is further complicating the market. China imported about 621,839 tonnes of benzene last year and exported 278,111 tonnes. Imports in H1 2010 have amounted to 119,051 tonnes while it exported 55,489 tonnes.

Demand has not been too bad. But there is simply too much being produced.

Cuts in operating rates will be needed. The question is who will move first and when.

In the words of one market analyst: “No one wants to be first as they don’t want to give their competitor an advantage.”

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