BUENOS AIRES (ICIS)--Aromatics markets in Latin America are facing challenging economic conditions and this is likely to continue into the next year, market participants commented on Monday on the sidelines of the annual meeting of the Latin American Petrochemical Association (APLA).
“There is a lot of supply in the market with Mexico and Colombia both trying to raise their export volumes. Demand typically tracks movements in GDP and has not been as strong as expected as several countries in the region are struggling economically,” a market participant commented.
GDP growth in Mexico and Brazil is expected to fall short of 1% in 2019 while host country Argentina’s economy is expected to contract by around 3% this year.
“Supply is lengthening as China builds out its capacity across the aromatics chain. Many of the import cargoes that had previously gone to Asia are simply not needed by the market anymore,” a market player said.
Sluggish demand in the styrenics chain has resulted in lengthening availability for styrene and its primary feedstock benzene. New benzene capacity in Asia has also put downward pressure on global benzene pricing.
In the toluene and mixed xylenes (MX) markets, prices are moving close to blend value as discouraging chemical demand for these products is encouraging refiners to keep larger portions of their toluene and MX production in the gasoline pool rather than extract them for the chemical markets.
Toluene prices in the US Gulf have been trading at a premium to benzene over the past several weeks, undermining margins for on-purpose benzene production units, which convert toluene into a mixture of benzene and xylenes. Use as a feedstock in on-purpose benzene units is the largest source of chemical demand for toluene.
Seasonality and economic headwinds are also weighing on chemical demand for MX. Paraxylene (PX), by far the largest of the three major commercial isomers of xylenes, is facing slower consumption requirements during a down year for the polyester chain.
Pictured above: Benzene molecule