PX-naphtha spread at 2013 low in Asia on rising paraxylene supply

The Asia price spread between paraxylene and feedstock naphtha narrowed by US$16.12/mt day on day to US$485.88/mt last Friday, nearing the lowest level seen in 2013, amid rising PX supply, Platts data showed on Monday. The spread is at the second lowest level for the year, after hitting a bottom of US$478/mt on March 28. Last Friday, the CFR China PX benchmark sank US$23/mt from Thursday to US$1,416.50/mt, while the CFR Japan naphtha price fell US$6.87/mt to US$930.63/mt over the same period. The slide in Asian PX prices began last week as rising purified terephthalic acid inventories in South Korea led to expectations of a decline in PTA plant operating rates, which will result in less usage of PX. "If the [PTA plant] operating rates come down, then there will be more PX supplies available from South Korea," a trading source. South Korea's PTA inventories are rising also because some buyers in India have canceled their purchase volumes on declining PTA demand. "As a result, South Korean PTA producers ended up holding high inventories. They are dumping their PTA cargoes in China but still, inventory levels are high," the trader said. The increase in supplies from South Korea to China have pressured CFR China prices lower, noted the sources. The CFR China PTA price benchmark was assessed at $1,002/mt on Friday, the lowest level since July 31, 2012. Looking forward, sources said they expect the spread to narrow further amid continued weakness in the Asian PX market. Early Monday, the CFR Taiwan/China PX price continued to decline, shedding US$10/mt from Friday to be pegged at US$1406.50/mt. "It is possible for the Asian PX price to fall below US$1400/mt CFR," said another trading source.
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