Petrotahlil - In China, Sinopec is expected to import around 20,000 mt/month of isomer-MX after its Hainan No. 2 paraxylene plant comes into production.
Demand may pick up from July-August, sources close to the matter said.
The No. 2 plant has the capacity to produce 1 million mt/year of PX, and the capacity at its No. 1 plant will also be raised by 400 mt/year to 1 million mt/year, S&P Global Platts reported earlier.
Taiwan's Formosa Chemicals and Fibre Corp. may also return to the spot market in July-August, sources said, after a hiatus due to the closure of its fire-hit No. 3 aromatics plant in Mailiao, Taiwan, since April 7.
A report in local Taiwan media on May 6 quoted the Formosa Group's deputy Chairman, Hong Fuyuan, saying that the company was working towards having the No. 3 plant back in production in mid-August, but depending on approval from local authorities. Attempts to confirm this with FCFC sources were unsuccessful.
FCFC had separately shut its No. 1 aromatics plant at the same location from April 10 to end-May for maintenance, meaning two out of its three aromatics plants which are key consumers of isomer-MX, are shut at the moment.
FCFC's No. 3 plant has the capacity to produce 900,000 mt/year of paraxylene, 640,000 mt/year of benzene and 240,000 mt/year of orthoxylene, while the No. 1 plant can produce 287,000 mt/year of PX, 213,000 mt/year of benzene and 80,000 mt/year of OX.
Isomer-MX prices have been on a downtrend since April 25, then at $738/mt FOB Korea, and margins versus both upstream and downstream products have narrowed over the last few months.
FOB Korea was last assessed at $684/mt on May 7 with the spread to naphtha at $106.88/mt, down from a year-to-date high of $204.25/mt on January 9.
"Almost all traders think the balance is very long now. Demand is low from Taiwan, India and Southeast Asia due to the narrow PX-MX spread," noted a Northeast Asian MX trader.
The spread versus PX, the key downstream product of MX, has fallen to $219.75/mt on May 7, down from a year-to-date high of $466.67/mt on March 12. With the sharp narrowing of the PX-MX spread, PX producers who were previously buying spot MX to maximize their PX production are now hesitating to make further purchases, MX traders said this week.
PX prices have tumbled recently amid the startup of China's Hengli Petrochemical's first PX plant over March-April, which will likely be followed by a second plant later this year. The two plants have a combined capacity of 4.5 million mt/year. Several other large PX plants are also expected to start up within this year mainly in China, likely lowering the country's demand for PX imports.