News Code : 44560

Petrotahlil — Asian paraxylene producers are considering reducing operating rates, as rising naphtha feedstock prices and long supply of PX caused margins narrow to unprecedented lows, market sources said.

Market participants are keeping a close watch on any PX operating rate cuts that would potentially ease the present oversupply, said PX and upstream naphtha sources.

"China is the biggest buyer of [petrochemicals], if they reduce their runs, then reformers in South Korea and Japan cannot export to China and will have to reduce their runs," a South Korean refiner said.

"This has not happened yet but there is a possibility if the PX/naphtha margin goes lower," the source added.

The spread between CFR Taiwan/China PX marker over CFR Japan naphtha physical was at $164.375/mt June 1, down $12/mt day on day, S&P Global Platts data showed.

The spread is at an all-time low since Platts began assessments of PX CFR Taiwan/China marker on April 4, 2005.

Weak PX demand in the region triggered by the coronavirus pandemic has led to ample supplies, weighing on production margins as PX could not keep up closely with day-on-day gains seen in its feedstock markets.

While the short-term PX market outlook remains bleak and uncertain, the squeeze in production margins could drive considerations to reduce operating rates, lending some support to the current weak PX supply-demand, said sources.

The PX CFR Taiwan/China marker was assessed at $484/mt on June 1, up $10.50/mt on the day, Platts data showed.

Asian naphtha prices were boosted by gains in crude and tighter supplies due to fewer arbitrage cargoes slated to arrive from the West of Suez, and lower production by East of Suez refineries, market sources said.

Reflecting firmer sentiment, cash differentials for spot paraffinic naphtha parcels was assessed at plus $6/mt on June 1, up $1.50/mt on the day, against benchmark Mean of Platts Japan naphtha physical, on a CFR Japan basis, Platts data showed.

The benchmark naphtha C+F Japan cargo was assessed at a near 12-week high of $319.625/mt on June 1, up $22.50/mt on the day. It was last higher on March 11 when it was $326.625/mt, Platts data showed.

In its upstream mixed xylenes market, gasoline blending demand from the Chinese market provided support to prices.

The price spread between benchmark CFR Taiwan/China PX and its feedstock isomer-grade mixed xylenes, on a CFR Taiwan basis, was at $45/mt June 1, Platts data showed.

The spread had earlier reached an all-time low of $40.50/mt on May 29 since Platts began MX assessments on May 16, 2006.

The MX CFR Taiwan marker was assessed at $439/mt on June 1, up $6/mt from May 29, Platts data showed.

Platts

END

 

Send Comment