China's domestic isomer-grade mixed xylenes prices have strengthened partly due to the startup of Dragon Aromatics' new 800,000 mt/year paraxylene plant in Fujian province late August, market sources said Thursday.
"Hikes in domestic isomer-MX prices in China are mainly attributable to the [beginning of] commercial operations at Dragon Aromatics' [PX plant],"one of the sources said.
Dragon Aromatics was currently buying 40,000-50,000 mt/month of feedstock isomer-MX, a source close to the company said.
"The company is heard buying domestic isomer-MX via two or three local [Chinese] suppliers, in tandem with buying from a South Korean producer," the source said, without providing further details.
The PX plant had come on stream on August 20, following which PetroChina and Sinopec raised domestic isomer-MX prices this week. Typically, China's domestic isomer-MX offers are around $50/mt below FOB Korea isomer-MX prices, but they have now flipped above FOB Korea prices.
PetroChina on Wednesday raised its ex-works offer for isomer-MX in South China by Yuan 300/mt, or 3.1%, to Yuan 9,900/mt, sources said. This price equates to $1,333/mt on an import parity basis, which is higher than either the FOB Korea or CFR Taiwan basis spot prices.
Thursday afternoon, FOB Korea isomer-MX was pegged at $1,309.50/mt and CFR Taiwan at $1,324.50/mt, according to Platts data.
China Petroleum and Chemical Corp., or Sinopec, also hiked its ex-works isomer-MX prices in South China, raising it by Yuan 150/mt, or 1.6%, from Tuesday, Platts previously reported. Sinopec Guangzhou raised its offer for isomer-MX to Yuan 9,700/mt, equivalent to $1,305/mt on an import parity basis.
Dragon Aromatics has been operating its PX plant at 90% of capacity since August 20, after starting commercial operations following an explosion during test runs, Platts reported last Friday.
The company shut the PX plant in late July after a leak led to the explosion of a hydrogen pipeline. Before the incident, the plant's startup had been repeatedly delayed from an initial target in the fourth quarter of 2012 due to regulatory approvals, construction delays and feedstock procurement issues.
The plant started test runs April 22 using secondary feedstock isomer-MX. Condensate is likely to be the plant's main feedstock, along with some isomer-MX. If it runs at full capacity with condensate as the main feedstock and isomer-MX as additional feedstock, the company would likely have to buy up to 300,000 mt/year of isomer-MX, Platts previously reported.
Meanwhile, MX inventories in China were also declining with the increased demand from the new PX plant, sources said. They estimated that MX inventories in East China were at 80,000 mt last Friday, down 11.11% week on week, and in South China at 30,000 mt, down 14.29% week on week.
