US spot paraxylene prices breach 11-month high, producer economics improve

New York — US prompt spot paraxylene prices hit a more than 11-month high this week as pricing rose in line with stronger Asian and European values.

Prompt spot paraxylene prices gained $45/mt week on week amid rising prices globally and closed Feb. 5 at $750/mt, their highest level since Feb. 26, 2020, S&P Global Platts data showed.

The gains have resulted in improved economics for US paraxylene producers as prompt spot mixed xylene prices have been rangebound to end the week at 205 cents/gal ($625/mt) FOB USG. The divergence has widened the spread between the two products to $125/mt, levels not seen since late in April 2020. Typically, producers consider break-even levels to be $125-$150/mt, sources have previously said.

US paraxylene prices have benefited from stronger Asian pricing with the market in the region characterized as tight. Sources in the Asian market have posited that higher pricing and better margins could incentivize producers to increase run rates though others have suggested that the tightness would be limited in duration.

Upstream, US spot mixed xylene prices have remained relatively subdued as sources have said that demand was limited with supply improving in line with the restart of P66's Alliance facility. The Alliance facility has an estimated MX production capacity of 197,000 mt/year.

The improved economics enjoyed by US producers could be short-lived however as sources have noted that Marathon will go into planned maintenance at it's Galveston Bay facility in mid-February. The company has two reformers with and estimated mixed xylene capacity of 879,000 mt/year.

Additionally, PX prices could face continued pressure amid the expected start-up of Zhejiang Petrochemicals Phase 2 PX unit in Q2, a move that could add as much as 5 million mt into the market.

Despite more favorable economics, it was unclear whether US PX producers would increase run rates as imports continued to flow into the US Atlantic Coast. Panjiva data shows that January PX imports into the US were at nearly 70,000 mt, up from just over 36,000 mt in December.

Sources have noted that producers in the Middle East and South Asia have focused their attention on the US amid vast capacity expansions in Asia. This trend was expected to continue in the near-term and sources in the US market have noted that it was cheaper to import material into the East Coast as the high costs of procuring a Jones Act vessel to move material from the USGC was prohibitive.