Quarterly Update on Global O-Xylene (OX) Market
For the Quarter Ending June 2021
Due to the resumption of around 83% of total Mixed Xylene (MX) capacity in the USA Gulf coast, the supply of o-Xylene (OX) improved in the second quarter, although it remained fairly tight. The supply outlook improved comparably to the previous quarter as the regional infrastructure restored and the operating efficiency increased in the North American region. Demand was stagnant as offtakes were stable from the downstream Phthalic Anhydride manufacturers, resulting in healthy consumption volumes. Although, the demand tapered off late in the quarter as a downstream Phthalic Anhydride plant went offline due to planned maintenance. Price of o-xylene remained on an uptrend with FOB contract price for Texas settling at USD 920 per MT.
O-xylene supply in the Asia Pacific region was strong to meet rising demand from the downstream industries. However, the production margins were subdued amidst the May Day holidays in China. The ending of turnarounds in the upstream MX facilities in Japan improved the market outlook in Northeast Asia. Regional pricing trends varied considerably in China and rest of Asia as the Chinese authorities imposed the consumption taxes on heavy aromatic commodities. Imposition resulted in the price hike for o-xylene along with the cost support from other upstream commodities. In India, the pricing trend showed a gradual improvement but maintained a downtrend throughout the quarter with Ex-Works Vadodara offers hovering around USD 845 per tonne in June.
The supply of o-xylene (OX) in the European region was tight for a larger part of the quarter, although it improved towards the end of Q2. Supply fundamentals were tight as the o-xylene was limited in availability and demand for the material remained strong during April and May, following the Q1 trend. However, demand from downstream Phthalic anhydride deteriorated as quarter met its conclusion. Reduced demand also presented the opportunity for supply fundamentals to improve. Overall, the consumption levels remain healthy for OX in Q2.
For the Quarter Ending March 2021
For almost half of the first quarter, supply of almost all xylenes remained battered by the production outages caused due to the winter storm Uri that hit the US Gulf coast in mid-February. In the last week of February, Flint Hills Resources was prepared to restart its two OX plants located in Texas. Downstream demand from Phthalic Anhydride producers remained high despite many observing an abrupt spike in OX backed by sharp crude oil gains. With persistent production and logistic constraints, several downstream producers feared constrained availability of OX at least till March.
Ortho-xylene supplies in the region were tight during the first quarter of 2021, due to limited availability of the imported cargoes from the western regions. Prices gained support from buoyant demand from the downstream phthalic anhydride (PA) producers in China. Due to tight regional availability, Sinopec raised domestic prices of OX in the first week of February. OX offers were hovering around $660-$670/mt in mid-February with buyers grappling to balance out the regional demand-supply mismatch.
The European o-Xylene market witnessed mixed results in Q1 2021, as the supplies were balanced to tight in the region. Supply constraints were caused by hindered transportation and low operating rates of the plants in northwest European region due to cold weather throughout February and starting of March. Demand was balanced from the downstream PA sector. Higher demand and limited imports increased the spot OX prices, triggering sharp upticks in the regional offers.
For the Quarter Ending September 2020
Production rates of o-Xylene were lower in comparison to the previous quarter due to the waning production margins for aromatics. Since the arbitrage economic window was disrupted in the month of September, it hindered the supply of deep seas cargoes. However, strong fundamentals of the downstream products due to revival in the market sentiments of automotive and construction industry kept the demand for o-Xylene steady in the region. Analysts anticipate the demand to improve further in Southeast Asia with restocking activity ahead of the festive season in India.
Demand for feedstock o-Xylene in the European market remained dull in July but gradually improved till the end of quarter on improvement in offtakes from the automotive industry. The excess inventories of the product which panicked producers during the start of quarter could be seen gradually emptying towards the end. The sentiments were further supported by optimum operating rates at the downstream manufacturing units that helped in catering to sufficient supply. However, spot buying activities remained dull as influential buyers relied on contract volumes.
Demand for o-Xylene remained muted with series of shutdowns implemented in downstream plants under fears of Hurricane Laura. With construction industry witnessing gradual recovery as people increased home renovation activities amidst the home quarantine period, it kept the fundamentals of o-Xylene balanced till the end of the quarter. Moreover, sustained demand from the region’s paint and coating industry assisted in lifting the market prospects of o-Xylene in the current quarter.