The European spot mixed xylene market is likely to remain under downward pressure in August from greater availability, less buying interest due to unfavorable paraxylene production economics and a shut arbitrage to US, market sources said this week.
After hitting an eight-month high two weeks ago at $1,170/mt FOB ARA, the Isomer grade was assessed at $1,145/mt FOB ARA last week, down by $35/mt.
An offer was heard this week at $1,140/mt and there was no buying interest reported.
"Lousy PX business, no arbitrage [to the US] and sufficient production," one source said of the market this week, adding that availability was rising.
Expectations about the economics of producing PX were bearish despite higher cash margins because of the impending startup of new production facilities in Asia.
The monthly premium of PX FOB ARA over CIF NWE naphtha cargoes, one of the indicators of PX production economics, averaged $379/mt in July, the highest since the beginning of the year. Nevertheless, the July average was 22.72% lower than the average premium for 2013, Platts data showed.
The weekly average of PX premium to Isomer xylenes in July was seen at $151.25/mt, however, the weekly average in 2014 was 40.65% lower than the weekly average in 2013.
The FOB USG mixed xylene market has fallen 35 cents/gal since July 7 to 383 cents/gal ($1,164.32/mt) Thursday, Platts data showed.
"US market is falling, at $1,165/mt the arbitrage [from Europe] is shut, at this level there is no chance of sending product to the US," a second source said.
Moreover, industry sources said that material was expected to come onto the market from Total's Flushing refinery, which came on stream after the end of maintenance. The source at Total was not available for comment.
"Flushing material is still not on the spot market," the second source said, adding that it might take some time for Flushing's production to hit the market.
