The global supply of paraxylene (PX) is expected to remain tight well into the second half of 2012, underpinned by tight feedstock isomer-grade xylene supply as well as plant expansions in the downstream purified terephthalic acid (PTA) sector.
The global supply of orthoxylene (OX) is similarly expected to stay tight as producers continue to focus their production efforts on maximising PX yields, consequently lowering their OX operating rates.
Despite the prevailing firm PX and OX prices, global producers are wary of a persistent uptrend as end-users in the downstream PTA and phthalic anhydride (PA) sectors are grappling with negative margins.
The ongoing eurozone debt crisis, an uncertain outlook for a recovery in the US economy and slowing demand growth in the Chinese market is casting a cloud of uncertainty over players in the sector and consequently sparking volatile fluctuations in spot PX and OX prices.
Negotiations for PX monthly contract prices are also expected to become more intensive and sellers are likely to capitalise on the tight market conditions, while buyers seek to mitigate their losses from the rising raw material costs.