NWE Xylenes – MX premiums dip on lower PX, lengthening supply

– PX ECP yet to settle; seen higher

– OX rises as cargo delay exacerbates tight supply

European mixed xylene premiums fell $5/mt Thursday on lengthening supply and falling paraxylene prices. One trader said European mixed xylene had nowhere to go out of Europe because it was too highly priced. There were some reports, however, that European product was moving to the US Gulf to go into the blending pool as the switch to summer grade RBOB started, and higher demand for blend stocks is seen. However, several traders said they did not think the arbitrage was open, with one saying the US “would be better off buying from Asia.” On paper, the arbitrage did look open, with the gross profit margin based on a 5,000 mt cargo calculated at $43.51/mt. However, this falls to below $20/mt when financial and miscellaneous costs are considered, according to traders. In addition, traders were concerned there was only prompt demand in the US market and that it may fall once European cargoes arrived, which could be three weeks. European orthoxylene spot prices rose $10/mt to $1,000/mt FOB ARA. A ship from the US Gulf carrying around 4,000 mt of orthoxylene was reportedly diverted this week, delaying its expected arrival into Rotterdam from March 20-25 to April 10-14. This was exacerbating the tight supply situation in Europe, sources said. European paraxylene fell $9.50/mt to $1,007.50/mt FOB ARA March and April, tracking falls in the Asian market as downstream purified terephthalic acid futures fell. Despite this, and a lack of spot cargoes moving out of Europe, “there is still plenty of demand for PX in China,” a European trader said. This could be seen in the Asian market where the paraxylene spread to feedstock isomer-MX widened to an almost eight-year high of $466.67/mt Tuesday amid high mixed xylene stocks and paraxylene plant turnarounds.

RATIONALE:

S&P Global  assessed the March CIF ARA mixed xylene premium over Eurobob gasoline at $145/mt Thursday, down $5/mt on the day, on falling paraxylene and lengthening supply, according to sources. April was assessed at $138/mt CIF ARA, maintaining its structure to March from Tuesday. March paraxylene was assessed at $1,007.50/mt FOB ARA, down $9.50/mt and tracking movements in the CFR Taiwan/China H1 May laycan. April was assessed at $1,007.50/mt FOB ARA, down $9.50/mt, tracking movements in the CFR Taiwan/China H2 May laycan. Orthoxylene was assessed up $10/mt at $1,000/mt FOB ARA, based on continued tight supply and strong demand.

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