SINGAPORE--Orthoxylene (OX) spot prices in Asia have stabilised after dipping $75-110/tonne over two weeks in late June but the outlook was uncertain, buyers and sellers said on Monday.
While some think its one-week-old rebound seemed to have fizzled out, others were hopeful of higher prices to come.
Between mid-June to the month s tail-end, OX prices tumbled to $1,420-1,435/tonne CFR (cost and freight) NE (northeast) Asia from $$1,480-1,550/tonne. Prices recovered in early July to $1,480-1,490/tonne but the rebound only lasted a week.
The sharp decline of more than $100 in June was largely attributed to poor downstream market conditions, as well as increased production of paraxylene (PX) which led to a brief glut of OX supply - its by-product.
The downstream markets are not doing very well, and margins are squeezed by the increases in OX costs this year, said a company official from Thirumalai Chemicals, a leading producer of phthalic anhydride (PA) and other related derivatives in India.
Since January, OX prices had risen to above $1,200/tonne in mid-May, up sharply from $1,020-1,050/tonne. OX saw eight consecutive weeks of increases between 1 May and mid-June - rising a sharp $350-405/tonne to $1,480-1,550/tonne.
We know oil prices are high, and aromatics prices are high, so the increase in OX was expected, a source from Continental Chemical, a major OX end-user in southeast Asia, said.
Isomer xylene and aromatics prices had risen a lot over the past two months, and we all know it s mainly due to higher crude oil prices, said a veteran OX trader based in Korea.
If OX prices cannot catch up with these other aromatics, particularly as PX is also so high, [OX] producers would simply not produce OX or limit their [OX] output, he added.
An integrated producer in Taiwan confirmed this trend.
He said that since PX had shot up to $1,680-1,700/tonne CFR Taiwan in June from $1,300-1,315/tonne in early May, it was not realistic for us to expect OX prices to just have small increases, so we would rather throw back the OX to make more PX.
Some participants believed this bullish trend had come to an end, at least for now.
Prices of dioctyl phthalate (DOP), the main derivative of PA, had stagnated at $2,050-2,060/tonne CFR East Asia since early June. PA prices had similarly seen a sluggish trend, fluctuating between $1,430-1,470/tonne CFR China between June and now.
So now, downstream cannot sustain, and OX falls back, said a leading end-user with PA plants in China and Taiwan.
But not every player was convinced that OX prices would not spike again.
Pointing to the recent one-week-old recovery in prices, another Korean trader said that the Chinese imported very little in the past two months, so I predict [OX] prices would rebound very soon.
A Chinese producer of OX and PX agreed, saying that PA plants in China cannot afford to stop totally for a long time, due to the [prevailing] credit crunch and there is limited supply of OX within China.
One likely scenario is some PA plants stop suddenly next one or two weeks, due to lack of OX, and then PA prices rise and OX follows and rises further, maybe by end of July, added the Chinese producer.
While some think its one-week-old rebound seemed to have fizzled out, others were hopeful of higher prices to come.
Between mid-June to the month s tail-end, OX prices tumbled to $1,420-1,435/tonne CFR (cost and freight) NE (northeast) Asia from $$1,480-1,550/tonne. Prices recovered in early July to $1,480-1,490/tonne but the rebound only lasted a week.
The sharp decline of more than $100 in June was largely attributed to poor downstream market conditions, as well as increased production of paraxylene (PX) which led to a brief glut of OX supply - its by-product.
The downstream markets are not doing very well, and margins are squeezed by the increases in OX costs this year, said a company official from Thirumalai Chemicals, a leading producer of phthalic anhydride (PA) and other related derivatives in India.
Since January, OX prices had risen to above $1,200/tonne in mid-May, up sharply from $1,020-1,050/tonne. OX saw eight consecutive weeks of increases between 1 May and mid-June - rising a sharp $350-405/tonne to $1,480-1,550/tonne.
We know oil prices are high, and aromatics prices are high, so the increase in OX was expected, a source from Continental Chemical, a major OX end-user in southeast Asia, said.
Isomer xylene and aromatics prices had risen a lot over the past two months, and we all know it s mainly due to higher crude oil prices, said a veteran OX trader based in Korea.
If OX prices cannot catch up with these other aromatics, particularly as PX is also so high, [OX] producers would simply not produce OX or limit their [OX] output, he added.
An integrated producer in Taiwan confirmed this trend.
He said that since PX had shot up to $1,680-1,700/tonne CFR Taiwan in June from $1,300-1,315/tonne in early May, it was not realistic for us to expect OX prices to just have small increases, so we would rather throw back the OX to make more PX.
Some participants believed this bullish trend had come to an end, at least for now.
Prices of dioctyl phthalate (DOP), the main derivative of PA, had stagnated at $2,050-2,060/tonne CFR East Asia since early June. PA prices had similarly seen a sluggish trend, fluctuating between $1,430-1,470/tonne CFR China between June and now.
So now, downstream cannot sustain, and OX falls back, said a leading end-user with PA plants in China and Taiwan.
But not every player was convinced that OX prices would not spike again.
Pointing to the recent one-week-old recovery in prices, another Korean trader said that the Chinese imported very little in the past two months, so I predict [OX] prices would rebound very soon.
A Chinese producer of OX and PX agreed, saying that PA plants in China cannot afford to stop totally for a long time, due to the [prevailing] credit crunch and there is limited supply of OX within China.
One likely scenario is some PA plants stop suddenly next one or two weeks, due to lack of OX, and then PA prices rise and OX follows and rises further, maybe by end of July, added the Chinese producer.
