Europe MX market eyes gasoline price increases

14 April 2014 13:38 Source:ICIS News

LONDON (ICIS)--The European mixed xylenes (MX) market has been observing recent rises in gasoline prices with sellers hoping it will put upward pressure on MX prices too, sources said on Monday.

Some market participants believed the potential for MX to be blended into the gasoline pool was providing a floor for MX prices. Gasoline prices last week rose above $1,000/tonne on higher crude prices.

One distributor stated that he thought the Euro-bob quote plus a premium of $65/tonne was the floor for MX. With Euro-bob trading on Friday at  $1,014-1,018/tonne FOB (free on board) ARA (Amsterdam-Rotterdam-Antwerp), this would equate to an MX price of $1,079-1,083/tonne FOB Rotterdam – considerably above prices seen in the market today.

However, others in the market downplayed the impact of gasoline blending.

“It depends on the quality of the xylenes - only those with lower bromine or lower chlorides can be blended,” said one trader.

Nevertheless, the balance of opinion is that some upward pressure is likely.

“Sooner or later it will have to have impact on MX. Even if not all can be used in the gasoline pool some can,” said one producer.

The European MX market has been very limited with a wide spread between buyers and sellers price ideas, limiting trades. Buyers, primarily in the downstream paraxylene (PX) market, have seen low demand from the polyester chain and weak pricing, which has limited their buying appetite.

However, MX sellers have been unwilling to lower their offers, due to strong pricing of naphtha and other aromatics like benzene. In addition they have pointed to the potential of MX to be used in the gasoline pool as a blender to increase octane.

Traditionally additives such as MTBE, ETBE, isooctane or toluene are added for this purpose but with the value of many of these additives rising, the gasoline industry is starting to see MX as a more attractive alternative.

By Rhian O'Connor