Asia isomer-grade xylene spot prices seen volatile in second quarter

SEOUL (ICIS)–Asia isomer-grade xylene spot prices in the second quarter of this year are likely to be volatile as several new downstream PX facilities are expected to come on line that may either lead to oversupply or reduction in run rates of PX, market sources said on Wednesday.

Prices are likely to follow market trends in the downstream PX and purified terephthalic acid as players will be looking to these sectors for a direction, the sources added.

“Supply [of isomer-grade xylene] for May and June is expected to tighten as the new PX plant would require MX to run,” a northeast-Asia based trader said.

Market conditions in the downstream PX and PTA sectors are looking more positive.

“There’s been reductions in production capacities in a lot of PX and PTA plants. PTA producers are sitting on low inventories and are starting to seek PX cargoes and that is a good sign,” the trader added.

A major regional producer in South Korea, SK Global Chemical (SKGC), would be reducing its contractual volumes in June upon the start-up of its new paraxylene units in Ulsan and Incheon at the end of June.

“We would have lesser cargoes available for the spot market starting in June as most of the isomer-grade xylene material would be used to feed our new plants,” according to a company source.

On the other hand, other players said supply-demand fundamentals would be stable-to-long.

“Despite the expansion plans in the {downstream} PTA sector, the new PX plants have huge capacities. It will be hard for the PTA sector to absorb all of it. It very much depends on these parax [paraxylene] units run rates,” a northeast-Asia based end-user said.