Chemical profile: US paraxylene

17 July 2014 18:17 Source:ICIS Chemical Business

Paraxylene (PX) is predominantly used to produce terephthalic acid. Other outlets include dimethyl terephthalate (DMT), di-paraxylene, and herbicides. It is also used in solvents. Both terephthalic acid and DMT are used to make polyethylene terephthalate (PET). DMT is also use to manufacture ­polybutylene terephthalate (PBT) resin.

Approximately 97% of PX demand comes from the polyester chain via one of its intermediates, purified terephthalic acid (PTA) or DMT. The breakdown for polyester demand is 65% from fibre, 27% from PET bottle resin and the remaining 8% from film and other plastic end uses.

Supply of PX in the US market is systemically long and demand is predominantly tied to the health of the downstream PET bottle resins market via PTA, the intermediate chemical feedstock for PET derived from PX.

In June to July, PET started to see its seasonal strength kick in, which happened later than usual. The PET peak season usually starts in spring, as warm weather is the driving factor for higher demand of bottled drinks and bottled water. However, cool weather from the winter season lingered longer than usual, keeping demand softer than expected until June.

Meanwhile, the PX spot market remains very thin, with very few deals done in the year. The majority of PX business is done on a contractual basis.

Recent production cutbacks in Asia PX prompted an upswing in PX spot prices there during June. Rising Asian PX spot prices in turn lent upward price pressure to the US PX market.

Asian producers reduced operating rates because PX was long in the Asian market while demand was weak. The combination set Asian PX spot prices on a declining trend during the first and second quarters.

The reversal of the Asian PX spot price trend, coupled with strengthening raw material prices in the US in May and June, halted the decline in US PX and pushed prices upward. The US PX contract price for June was settled at 66 cents/lb ($1,455/tonne) delivered (DEL), a 4.8% increase over the 63 cents/lb DEL May contract price.

The increase comes after a period of declining PX contract prices during the first quarter and start of the second quarter. The market ran into a difficult challenge in April, when buyers and sellers were unable to reach an agreement on a single price. Instead, April PX contracts were settled at a split, and the contract settlement did not occur until mid-June.

Since the April split settlement, contract negotiations have been slow moving. The latest – the June contract – was not settled until the very end of that month.

Conventional technology is based on the isomerisation of mixed xylenes from refinery reformate streams or from pyrolysis gasoline (pygas). High purity product can be obtained using crystallisation or selective adsorptive separation. Toluene disproportionation offers an alternative route, with the latest catalysts able to produce a PX-rich stream, but this route co-produces benzene.

Processes have also been developed using a zeolite catalyst for the alkylation of toluene with methanol to produce PX without ­benzene co-product. The Cyclar process by US-based technology company UOP converts propane and butane to PX and benzene.

There has also been development of a ­bio-based route to making PX.

US-based Virent is looking to produce a sugar-based aromatics stream containing benzene, toluene and ­xylenes using traditional chemical catalytic processing. Virent plans to commercialise its product under the trademark BioFormPX with its first commercial-scale bio-PX plant on line by 2015.

US-based Gevo also plans to ­produce bio-based PX by converting fermentation-derived isobutanol to PX using several traditional chemical processes such as dehydration, dimerisation, and cyclisation. In May 2014, Gevo announced its first delivery of bio-isobutanol-based PX to Japan-based Toray from a contracted facility at Silsbee, Texas, US, owned by South Hampton Resources.

July could further upward price movement in US contracts on the back of anticipated continued strength in raw material prices. However, Asia PX spot prices halted their upward trend in the week ended 4 July and instead declined. This could have a dampening effect on US contracts for July.

US PX contract pricing typically followed trends in the PX Asia Contract Price (ACP). However, because there has been no major settlement in the PX ACP since January, US PX contract negotiations have disconnected from the PX ACP. Market players have said that the market needs prices to strengthen to recoup some of the damage done when the contract was split in April.

In the near future, a new integrated PET/PTA plant being built in Corpus Christi, Texas, US by Mossi & Ghisolfi (M&G) could grow demand for PX. The new plant is scheduled to be operational by 2016.

By Feliza Mirasol