TAIPEI (ICIS)--Asia’s orthoxylene (OX) future is uncertain as several downstream phthalic anhydride (PA) makers have started installing catalyst in their plants to enable them to use alternate feedstock, said market participants late on Friday.
In January to May period, two major PA producers, Taiwan’s UPC and China’s Shandong Hongxin, have installed or will be installing the catalyst on their lines that would enable the PA facilities the flexibility to utilise either OX or naphthalene as feedstock.
Poor demand in the downstream plasticizers sector and high feedstock OX costs have reduced margins significantly among PA producers, with some even making losses, said a market source at the sidelines of Asia Petrochemical Industry Conference (APIC 2013), which was held in Taipei on 9-10 May.
“OX prices have been high because of the tight supply situation as most producers have reduced operating rates since mid-2012 because of the better earnings in [co-product] PX”, a China-based trader said.
“Several PA producers in China have either reduced their operating rates or shutdown just because they have been bleeding money and can no longer afford the losses. Installing the catalyst would mean more flexibility for these PA producers,” he added.
However, the tight supply situation is slightly alleviated as OX producers have started to raise their operating rates.
A combination of high feedstock mixed xylene costs and volatile PX prices have led to some makers to boost OX production due to the better earnings in OX.
“We are seeing more cargoes from Taiwan and Korea in the spot market but demand from China still remains poor. People in China are only buying on a need-to basis as it is still cheaper to buy domestically from [oil major] Sinopec”, a Korea-based trader said.
Prices on a CFR China basis were assessed lower from $1,450-$1,470/tonne (€1,117-1,132/tonne) on 3 May to $1,420-1,450/tonne on 10 May.
($1 = €0.77)