SINGAPORE (ICIS)--Asia’s isomer-grade mixed xylene (MX) prices surged by 9.7% from the start of the week to hit their 2.5-month highs, and the market may stay supported by limited production.
Spot prices of isomer MX on 11 July rose to their highest since end-April at $737/tonne FOB (free on board) Korea and at $761/tonne CFR (cost & freight) NE (northeast) Asia, according to ICIS data.
The market's four-day winning streak was supported by gains in upstream crude oil futures, which spiked by more than $2/bbl on 10 July amid a US inventory drawdown and a potential threat to production in the Gulf of Mexico posed by a developing tropical storm.
A number of isomer MX buyers were in the FOB Korea market, resulting in an unusually wide range of spot transactions at between $715/tonne and $737/tonne.
Market sentiment was also buoyed by low inventories in South Korea, where a major downstream paraxylene (PX) plant is expected to resume production next month.
PX is a key downstream product for isomer MX.
S-Oil Corp is expected to restart its 1m tonne/year PX plant in Onsan around the beginning of August after a scheduled turnaround.
In Taiwan, Formosa Chemical and Fibre Corp (FCFC) is seeking spot isomer MX cargoes for August delivery, on a formula basis, for its No 3 PX unit.
Demand for MX has stayed robust as the spread between PX and isomer MX stabilised after narrowing sharply in the past few weeks.
Despite strong price gains and healthy production margin, producers were unlikely to ramp up production of isomer MX in the short term.
In Japan, JXTG Nippon Oil and Energy suffered an outage at its continuous catalytic reformer (CCR) in Kawasaki on 5 July, with no definite restart date.
The CCR unit produces MX, along with benzene, toluene and other reformates.
In Taiwan, Formosa Chemicals & Fibre Corp (FCFC) is expected to restart its No 3 aromatics unit, with the timeline subject to approval from the local government.
Reformate production was also configured towards motor gasoline (mogas) production instead of isomer MX, due to better mogas-over-crude crack spread.
“Price [of isomer MX] will closely co-relate to PX and downstream purified terephthalic acid (PTA) prices,” a trader said, noting that downstream market performance is the the current key market driver instead of supply-demand fundamentals.
Focus article by Keven Zhang
Photo: An aerial view of Busan Container Terminal South Korea. (Source: JEON HEON-KYUN/EPA-EFE/Shutterstock)