HOUSTON (ICIS)--Freely-negotiated spot paraxylene (PX) decreased, pressured down by slower-than-expected demand growth in the downstream purified terephthalic acid (PTA) and polyethylene terephthalate (PET) markets in the polyester chain.
Lower US spot mixed xylenes (MX) and Asia PX also pressured US prices down. Demand typically steadily increases in the spring in preparation for peak plastic bottle drinking season in the warmer spring and summer months.
US spot MX decreased, tracking an increase in imports and improving production as refiners exit maintenance season and begin preparing for the spring and summer gasoline seasons, which start in May. Octane demand is nevertheless strong, maintaining upward pressure on the market.
Sustained shipping constraints amid poor weather conditions along Mississippi river waterways and in the US Gulf (USG) have exacerbated concerns in the domestic market.
US spot MX availability in the chemical sector is expected to decrease in the coming months as refiners increase the production and consumption of octane-enhancing aromatics such as toluene and MX for use in the gasoline-blending pool in preparation for the summer gasoline season, which officially starts in May.
Tighter MX supply in the chemical sector is thus likely to put upward pressure on PX prices as demand for product seasonally increases throughout the polyester chain in the coming months.
The US spot PX-MX spread is likely to remain healthy throughout the year amid lost PX production in the domestic market, as well as increased demand for PX in the global market amid growing downstream polyester and PET demand.
Steadily increasing PX demand in the coming weeks is likely to push prices higher and maintain healthy PX margins over MX.
The following analytical chart shows how justifiable MX consumption is for on-purpose PX production.
Freely-negotiated spot PX prices are expected to trend higher in March and April, as spot MX availability in the chemical market decreases and demand for PTA and PET begins to grow amid increased demand for plastic drinking bottles in the warmer spring and summer months ahead.
Higher spot prices are likely to put upward pressure on contract prices in the coming months.
In the meantime, poor weather conditions could put upward pressure on PX prices, as producers face logistical issues shipping raw materials to downstream PTA units in the region.
The weekly range for freely-negotiated US spot PX fell $15/tonne to $1,020-1,060/tonne FOB (free on board) in the USG.
PX is used to produce PTA, which is an intermediate in the production of PET. Major producers of US PX are BP, ExxonMobil, Flint Hills Resources and Indorama.