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© 2013 Platts, McGraw Hill Financial. All rights reserved.
US shale gas boom triggers reversal of mixed xylenes arbitrage ...
• The US shale gas boom has triggered a reversal of the mixed
xylenes arbitrage with Asia, making it economical to send As...
• Previously, the US was a net exporter of MX and
accounted for roughly 25% of Asia's MX imports (see
chart), or about 800...
Asian spot isomer-MX market size, US-Asia
arbitrage MX volume accounts for 25%
4
• This situation has changed since 2012-2...
US MX becomes firm on tight supply due to
shale gas boom
5
6
7
• South Korea's MX imports from the US have plunged 55%
(see chart) to 395,820 mt in 2013, from 888,046 mt in 2011,
acco...
8
Firm toluene drives US demand for MX
blendstock
• Before the arbitrage reversed, MX cargoes were rarely sent
from Asia to ...
Click below to download the PDF
10
Click here for more information
About PGPI
• The FOB Korea toluene marker surpassed the FOB Korea
isomer-MX marker (see chart) on February 21 at
$1,092.50...
12
13
• The US' April-September summer driving season has also
boosted demand for Asian MX from gasoline blenders.
• A number...
Stay connected to the markets
14
About Platts
• About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals
and ag...
© 2014 Platts, McGraw Hill Financial. All rights reserved.
16
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US Shale boom impacts Asian petrochemicals

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US shale gas boom triggers reversal of mixed xylenes arbitrage with Asia

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Transcript of "US Shale boom impacts Asian petrochemicals"

  1. 1. © 2013 Platts, McGraw Hill Financial. All rights reserved. US shale gas boom triggers reversal of mixed xylenes arbitrage with Asia By Michelle Kim in Singapore May, 13,2014 Additional media contact: Elizabeth Catalano at elizabeth.catalano@platts.com or +44 207 176 6024.
  2. 2. • The US shale gas boom has triggered a reversal of the mixed xylenes arbitrage with Asia, making it economical to send Asian material to the US, where the ongoing shift to lighter feedstocks has cut aromatics yields by as much as 55%, sources said. • The previous MX trade flow from the US to Asia has been shut for most of the past year, mainly due to higher prices and lower output in the US and lower prices in Asia. • The trend has been reinforced by the persistently weak Asian MX market due to bearish downstream paraxylene and polyester chains but firmer toluene and increased MX demand in the US for gasoline blending. • Taiwanese PX producer CPC sold 5,000 mt of MX to the US for loading in the first half of May, according to market sources. 2
  3. 3. • Previously, the US was a net exporter of MX and accounted for roughly 25% of Asia's MX imports (see chart), or about 800,000 mt/year. That was when the Asian market typically needed the outside supply to meet its estimated 3.3 million mt/year of regional spot demand. • But the Asian MX market now faces an oversupply due to bearish downstream PX and purified terephthalic acid since mid-2013. And the US MX market has been firm on lower aromatics yields (see chart) from a shift to lighter feedstocks resulting from the shale gas boom. 3
  4. 4. Asian spot isomer-MX market size, US-Asia arbitrage MX volume accounts for 25% 4 • This situation has changed since 2012-2013 when US shale gas boom reduced MX volumer from the US to Asia.
  5. 5. US MX becomes firm on tight supply due to shale gas boom 5
  6. 6. 6
  7. 7. 7 • South Korea's MX imports from the US have plunged 55% (see chart) to 395,820 mt in 2013, from 888,046 mt in 2011, according to customs data. • The MX arbitrage window from the US to Asia was closed for most of 2013 due to high US prices. • The average CFR Taiwan isomer-MX assessment in 2013 was $1,264.43/mt, compared with the average FOB US Gulf Coast assessment of $1,240.83/mt, according to Platts data. The spread needs to be at least $60-70/mt for the arbitrage to work, given typical freight rates from the US to South Korea or Taiwan.
  8. 8. 8
  9. 9. Firm toluene drives US demand for MX blendstock • Before the arbitrage reversed, MX cargoes were rarely sent from Asia to the US, as Asian isomer-MX is not considered on- spec in the US aromatics market. • The US MX market uses ASTM D5211 for its on-spec qualifications, while Asia uses ASTM D843. The former has a stricter 0.3% cap by weight on non-aromatics content, while the Asian standard allows up to 1%. That means Asian MX cannot be used as a PX feedstock or as a substitute for solvent-grade mixed xylenes. • However, recent firm Asian toluene prices have boosted demand for MX as a gasoline blendstock in the US. 9
  10. 10. Click below to download the PDF 10 Click here for more information
  11. 11. About PGPI • The FOB Korea toluene marker surpassed the FOB Korea isomer-MX marker (see chart) on February 21 at $1,092.50/mt against $1,087.50/mt, for the first time in 27 months, Platts data showed. • Asian toluene prices were driven higher by the firm Asian benzene market and by strong demand from the US, where toluene is used a feedstock to produce benzene and MX via the toluene disproportionation process. High TDP operation rates to make benzene have supported demand for toluene, while MX supply piled up in Asia. 11
  12. 12. 12
  13. 13. 13 • The US' April-September summer driving season has also boosted demand for Asian MX from gasoline blenders. • A number of market participants expect that the reversed MX arbitrage from Asia to the US to become common going forward, as Asian MX could keep falling with bearish PX and polyester chains. • "If Asian MX cannot be consumed in Asia, it has no choice but to head to other regions," a Seoul-based trader said May 8.
  14. 14. Stay connected to the markets 14
  15. 15. About Platts • About Platts: Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets. Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in more than 150 countries benefit from Platts’ coverage of the biofuels, carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, shipping and sugar markets. A division of McGraw Hill Financial (NYSE: MHFI), Platts is headquartered in New York with approximately 900 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com. • About McGraw Hill Financial: McGraw Hill Financial (NYSE: MHFI), a financial intelligence company, is a leader in credit ratings, benchmarks and analytics for the global capital and commodity markets. Iconic brands include: Standard & Poor’s Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power and McGraw Hill Construction. The Company has approximately 17,000 employees in 29 countries. Additional information is available at www.mhfi.com. • Platts petrochemicals experts are available for media interviews. A sample list of experts may be found at the Platts Media Center. For more information on petrochemicals, visit the Platts website at www.platts.com. Additional media contact: Elizabeth Catalano at elizabeth.catalano@platts.com or +44 207 176 6024. 15
  16. 16. © 2014 Platts, McGraw Hill Financial. All rights reserved. 16
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