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Asia OX-MX spread narrows to $33/mt after reaching six-week high

https://www.chemnet.com   May 10,2011 Platts
The Asian orthoxylene-isomer mixed xylenes spread, based on FOB Korea prices, narrowed by 40% to $33/mt Monday, after reaching a six-week high of $55/mt on Friday, as the crude and aromatics markets rebounded.

Upstream, front-month ICE Brent was up by $5.05/barrel or 4.7% from last Friday to $111.83/b at 16.30 pm Singapore time (0830 GMT) Monday, erasing part of the almost 12% day-on-day plunge Friday.

Similarly, isomer-MX tracked the uptrend in the energy complex to settle at $1,244.50/mt FOB Korea and $1,261.50/mt CFR China Monday, a rebound of $22/mt and $20/mt, respectively from last Friday.

The Asian isomer-grade MX market kicked off the week on a positive note, with market participants shedding earlier pessimism as crude markets firmed.

Monday's activity was a mirror image of Friday's, with buyers in the market scouring for June cargoes and sellers standing on the sidelines in the morning.

On Friday, crude and Asian stocks fell sharply amid concern over the global economy, poor US jobs data and disappointing manufacturing figures in Europe.

On a FOB Korea basis, OX was last assessed at $1,278/mt Friday, resulting in the narrowing of the OX-MX spread to $33.50/mt Monday from $55.50/mt Friday.

The last occasion that the OX-MX spread was at a similar level was on March 22, when Platts assessed the spread to be $29.50/mt.

OX producers typically require the spread between OX and feedstock isomer-MX to be at $100-150/mt to break even. OX producers are currently seeing negative margins.

South Korean OX producers had requested their regular offtakers to reduce volumes due to a reduction in OX production rates and were looking to purchase OX from the spot market to cover the shortfall in supplies.

"Most of the OX plants would try to decrease OX production as possible as they can. I have already asked my buyer to reduce the supply [intake]," said one OX producer.

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