PX and OX supply expected to tighten in Asia

(ICIS) -- Players in the paraxylene (PX) and orthoxylene (OX) markets in Asia are bracing themselves for tight suppy in 2012 amid the bleak economic outlook, as the eurozone continues to struggle with its debt crisis, sources said. A deluge of new purified terephthalic acid (PTA) plants in China is likely to tip the market in favour of sellers, players said. PTA facilities with a combined capacity of over 9m tonnes/year are expected to commence commercial operations in 2012, while 1.45m tonnes/year of fresh PX capacities is expected within the same period. For every tonne of PTA produced, 0.67 tonnes of PX is needed.

The PX supply shortage is expected to spill over into the OX market, as regional makers are likely to tilt production yields in favour of PX. OX is typically a by-product during the PX extraction process and can be re-isomerised to maximise PX yields.

Key OX makers, such as South Korea’s KP Chemical and Taiwan’s Formosa Chemicals and Fibre Corp (FCFC), kept the operating rates at their OX facilities low in October-December 2011 in favour of PX production.

KP Chemical operates two OX lines at Ulsan with a combined capacity of 230,000 tonnes/year, while FCFC runs three facilities at Mailiao that can produce a total of 475,000 tonnes of OX per annum.

Plans by Iran’s Petrochemical Commercial Company (PCC) to cut its OX exports by more than half in 2012 are also expected to exacerbate the supply tightness.

Meanwhile, PX supply for term shipments is already starting to tighten as PTA makers were heard trying to secure sufficient quantities of term shipments for 2012. Term contracts for 2012 delivery were heard concluded at premiums to published prices, underscoring the expected tight supply.

mrcplast.com