The spread between isomer-grade mixed xylene and feedstock naphtha has widened significantly, up 68% since the start of the year, amid firm paraxylene and weak naphtha fundamentals, S&P Global Platts data shows.
The spread hit $190/mt on January 31, a level similar to that of January 26, which was the widest since mid-August 2017.
The estimated breakeven level for MX over naphtha is roughly $150-$175/mt, two producers said.
Market sources said that one of the factors leading to the widening of the spread was firm prices in downstream paraxylene, which hit the highest price level on January 29 since May 2015 at $990.33/mt CFR Taiwan/China.
“PX went up sharply and the PX-MX spread is quite healthy. Chinese MX demand also seemed to increase due to tax regulation on mixed aromatics,” a Northeast Asian MX producer said.
Stricter tax regulation on mixed aromatics, a major gasoline blendstock in China, is expected to boost the demand for isomer-MX as a gasoline blendstock, market sources have said earlier.
“For January-February, Chinese demand [for isomer-MX] was particularly great,” another Northeast Asian MX producer said, estimating that South Korea will export around 50,000 mt of isomer-MX to China in those two months.
In comparison, South Korea exported nearly 27,000 mt of isomer-MX to China over October and November last year.
Meanwhile, naphtha prices have been under pressure lately due to competitive LPG prices, another petrochemical feedstock.
The spread between isomer-MX and its key downstream use, paraxylene, is currently in profitable terrain, last assessed at $204.50/mt January 31, above a required spread of $160-$180/mt for breakeven, supporting MX demand in the region.
–Gustav Holmvik, gustav.holmvik@spglobal.com
–Edited by Pankti Mehta, pankti.mehta@spglobal.com
Related Topics
Bullish sentiment helps Asian paraxylene hit record high as spread from naphtha widens – After recording the largest value in six months January 23 supported by tight supply due to turnarounds in the first quarter, the spread between the CFR Taiwan/China marker and the CFR Japan naphtha marker has begun a gradual retreat as latent sellers emerge from the shadows – the spread between the CFR Taiwan/China marker and the CFR Japan naphtha marker has begun a gradual retreat as latent sellers emerge from the shadows – Asian paraxylene naphtha spread
