Asian paraxylene's premium to toluene was assessed at a 10-month low of $257/mt Tuesday, down $11.50/mt from the day before, crunching margins for Mobil toluene-to-paraxylene unit operators, Platts data showed.
A company source at an MTPX unit said that the unit requires the price of PX to be around $170/mt above toluene to break even.
The last time the premium was any lower was on July 11, 2011, when it was assessed at $251.50/mt.
The fall in paraxylene has outpaced that of toluene.
The FOB Korea PX price plunged $215/mt from May 18 to be assessed at $1,216/mt Tuesday. While FOB Korea toluene sank $104.50/mt from May 18 to be assessed at $959/mt Tuesday.
The Asian PX market has been particularly under pressure in May as delays in starting up new downstream purified terephthalic acid plants in China led to an excess in PX supply. According to market sources, some of new PTA plants had asked to delay or cancel their PX term contract supplies from May due to startup delays.
Meanwhile, toluene prices sank amid falling crude and a poor demand environment for toluene.
"Long term, it is not bright. The paraxylene, PTA chain doesn't seem to have a bright trend, so this won't give a pull to toluene. I think if China can still continue buying and consuming, this will help toluene in the short term," said the trader.
Despite the delayed startup of new PTA plants, the Asian PTA market remained in a downtrend. Since May 18, the CFR China PTA price has dived $161/mt and was assessed at $933/mt Tuesday.
PTA demand in China is seen to be falling as the downstream polyester market is expected to weaken in tandem with fresh economic concerns in Europe. "More polyester plants are expected to be shut down [in China], and the PTA demand will worsen," said a PTA trader based in China.
Earlier, another trader based in Singapore said the toluene length in Asia, along with lower feedstock costs, could keep toluene prices lower.
But the trader said prices could recover in July, on "production consolidation, supply discipline, [and] gasoline recovery."
