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Continued strength in US PX bolsters toluene, derivative pricing

Houston — Strong paraxylene prices in the US continued to drive toluene pricing as well as downstream PTA and PET pricing, sources said this week. US spot paraxylene prices surged in August, rising near $240/mt throughout the course of the month and was last talked notionally at near $1,300/mt FOB USG Thursday.

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PX price support came via stronger Asian paraxylene prices and gains in the upstream feedstock market in the US, sources said.

Asian paraxylene values have risen near $350/mt since the beginning of August, closing Thursday at $1,371/mt CFR Taiwan/China. Additionally US paraxylene prices have been supported by gains in the upstream mixed xylene market where spot values have risen 26 cents since the beginning of September to close Wednesday at 311 cents/gal.

Sources pointed to tight supply and increased exports to Asia as the driving factors behind the pricing.

The stronger paraxylene pricing has pushed margins for MSTDP units higher, which has in turn improved demand for toluene. MSTDP margins were last estimated at near $195/mt prior to operating costs.

Sources said that stronger paraxylene prices were helping to offset weaker benzene, noting that benzene traditionally subsidizes disproportionation economics.

US prompt spot benzene prices were last assessed at 279 cents/gal DDP USG as sources talked of a well-supplied market; however, with PX notionally at $1,300/mt and toluene last assessed at 291 cents/gal, break-even costs for benzene would be near 206.50 cents/gal.

In addition to lending support to toluene, US paraxylene prices were also having an impact on the PET chain, sources said.

With spot paraxylene prices posting strong gains, sources in the downstream PTA market have anticipated sizable increases in the September US PX contract, with some estimating increases of as much as 7-10 cents. The August PX contract rose 2.85 cents to 55 cents/lb.

This has prompted talk of increases in the September PTA contract of as much as 6.50-7 cents/lb and would likely help US PET producer push September price hikes of 5-7 cents, sources said.

--Kevin Allen, kevin.allen@spglobal.com

--Edited by Pankti Mehta, pankti.mehta1@spglobal.com