The Asian paraxylene/naphtha spread slumped to 28-month low of $440.38/mt on Friday, down $14.62/mt from the previous day, with the regional PX market hit by rising supplies.
The CFR Taiwan/China PX price benchmark inched down $0.50/mt day on day to close at $1,406.50/mt Friday, but the CFR Japan naphtha price rose $14.13/mt to $996.13/mt, according to Platts data.
Market sources said the Asian PX market is currently under pressure amid rising supplies from Southeast Asia, US and Europe.
Indonesia's Trans Pacific Petrochemical Indotama has so far sold around 8 cargoes, or 40,000 mt, for December delivery to China, market sources said Monday, after the company restarted its 530,000 mt/year PX plant in East Java in early November. The plant was shut in December 2011 due to financial issues.
Indonesia's Pertamina, meanwhile, which has started to make an appearance in the spot market in recent months, also sold two cargoes totaling 20,000 mt on an FOB basis, for December delivery to China, sources said.
In addition, deepsea material has been coming in since October, particularly from Europe. According to China's General Administration of Customs data released last Friday, China imported 35,121 mt of PX from the Netherlands in October, almost four times imports of 9,261 mt a month earlier.
Such deepsea supplies have been building up at end-users' plants in Asia, with one trader saying: "It seems it is getting more and more difficult to find buyers of Southeast Asia-origin cargoes in South China and Southeast Asia."
But despite the narrowing spread PX/naphtha spread, Asian PX producers are still enjoying profits, as they typically need the spread to be around $250/mt to break even, industry sources have said.
Meanwhile, some market sources said the spread is not likely to fall further as the PX market could get some support following news of an oil pipeline explosion in Qingdao, China, last Friday. Qingdao Lidong's 700,000 mt/year PX plant is located near the pipeline.
The PX plant, which has been shut since late October for maintenance, was not affected by the blast, but sources close to the matter said Friday the explosion may delay the scheduled early-December restart of the PX plant.
"The explosion may raise safety concerns and it may delay the restart of the plant," a source said.
In mid-morning Monday trading, the CFR Taiwan/China PX price benchmark was pegged unchanged from Friday's close at $1,406.50/mt.
