Aromatics producers in Asia are struggling to cope with oversupply driven both by weak demand for their products and strong overall reformer economics, as per an ICIS blog.
Feedstock benzene, toluene and xylenes (BTX) prices have been on the decline. A weaker demand outlook in China is impacting BTX and its derivatives after the strong growth seen in 2009. Also, weaker naphtha prices and higher octane differentials between the 92 and 97 grades of gasoline point to strong reformer operating rates over the next few weeks. A waning naphtha market will be faced with increased supply and weaker demand due to the Formosa Petrochemicals cracker outage, making crack spreads the weakest for all the refinery products. Recent addition of refinery capacity in China has made it a significant exporter of gasoline. BTX values could therefore suffer further, as has so often been the case in the past, from factors beyond the control of the chemicals industry. As cracker margins are still on the decline in Asia, cracker rate cuts are likely to be seen, by possibly as early as August. This would further help to rebalance BTX markets through less availability via pygas.