China Isomer-Grade Xylene Imports Weaken on Increased Domestic Supply

Buying interest for imported isomer-grade xylene (IX) cargoes in China is slowing down as more domestically produced spot volumes were being offered in the market.

Additional spot IX cargoes are currently available in the domestic market as Hainan Petrochemical's downstream 600,000 tonne/year paraxylene (PX) plant is undergoing maintenance. The PX plant was shut on November 18 and will be down for two months.

"There are a lot more sellers in the market for RMB [renminbi or Chinese yuan (CNY)] cargoes and domestic prices are becoming more competitive," said a trader based in northeast Asia.

Domestic IX prices in east China were assessed at CNY5,810-5,860/tonne ($878-885/tonne) on 5 December, its lowest level in three weeks. The spot prices were last lower November 17, when it stood at CNY 5,750-5,780/tonne, according to ICIS data.

"The spread is narrower and buyers would rather pay a small premium for Chinese cargoes which can be sold in smaller parcels of 300-500 tonnes," the trader said.

Imported IX is usually marketed in parcel sizes of 3,000 tonnes and above.

A shorter delivery period also added to the appeal of domestic cargoes as Chinese buyers are exposed to additional pricing and operational risks when purchasing an imported cargo.

Traders were waiting to see how the Chinese market will digest the added spot supply before bringing in more cargoes from outside the country.

On top of additional domestic supply, at least 30,000 tonnes of IX are expected to arrive in China in December, as traders were actively purchasing relatively cheaper import cargoes in recent weeks as the Chinese yuan strengthened against the US dollar.

In October, China’s IX imports declined 31% month on month to two tonnes, official data showed.

Import bids for January cargoes were at around $710/tonne CFR (cost and freight) China on 5 December. Cargoes delivered into northeast Asia on a CFR basis were assessed at $725/tonne on the same day.

Apart from meeting downstream demand such as PX and orthoxylene (OX) production, IX was gaining popularity as an octane booster in gasoline blending.

But blending demand for IX was also under threat with a slew of mixed aromatics – also used as an octane booster in gasoline – expected to arrive in China in December.

Inventory levels have recently bounced back from multi-year lows. IX stockpiles at shore tanks along eastern China in the week ended 30 November stood at 25,000 tonnes, up 6,700 tonnes, or 37% from the previous week.

Picture: Qingdao container port in China. (Photographer: Yu Fangping/Pacific Press via ZUMA Wire/REX/Shutterstock)