HOUSTON (ICIS)--US paraxylene (PX) prices firmed in late 2017, and potential exists for pressure to remain on the market amid uncertainty downstream. Meanwhile, the orthoxylene (OX) market expects stability seen in late 2017 to continue into 2018.
PX firmed as the market grappled with both Hurricane Harvey recovery and the bankruptcy of polyethylene terephthalate (PET) resin producer Mossi & Ghisolfi ( M&G). As a result of these two situations, downstream demand for PX became unclear and remains so heading into 2018.
M&G's financial woes took 360,000 tonne/year of existing and 1.1m tonne/year of future PET capacity off line in the US, as well as 1.3m tonne/year of future capacity for purified terephthalic acid (PTA), of which PX is a feedstock.
M&G's issues and strong crude prices have the potential to keep PX pricing firm in 2018. This builds on the back of climbing contract and export prices in the latter half of 2017. US contract levels rose, owing to Hurricane Harvey’s disruption of the Texas Gulf Coast petrochemical sector. The market spent the latter part of 2017 trying to recover from the storm, which knocked 43% of US PX capacity off line.
Additionally, export prices for PX have been climbing going into 2018, tracking stronger crude and higher spot prices in Asia.
No PX supply issues have been heard going into the new year, as refineries have continued to improve their operating rates steadily since the storm. Despite uncertainty downstream, the market will begin to prepare for the peak bottle drink season in early 2018, which could keep pressure on prices.
In the OX market, the hurricane temporarily spiked contract prices, but recovery was quick as pricing for MX dropped when refinery operations began to resume. A sense of normalcy was restored in the OX market by November.
The OX market is now balanced heading into 2018, amid lower seasonal demand. Market players say that state is expected to continue. Heading into 2018, no uptick in pricing foreseen in the near term as demand should remain steady, market players said.
PX is used to produce PTA, which is an intermediate in the production of PET. Major producers of US PX are BP, Indorama, ExxonMobil, Flint Hills Resources and Chevron Phillips Chemical.