002-SPINTAX-Usgcasia-isomermx-arbitrage-unlikely-to-reopen-soonUSGC-Asia isomer-MX arbitrage unlikely to re-open quickly on diving business economics
The US Gulf Coast-Asia arbitrage for isomer-grade mixed xylenes on paper does not seem re-opening at any time quickly, as arbitrage economics proceeded narrowing, plunging to a five-month low Tuesday, Platts information revealed.
"The US-Asia isomer-MX [arbitrage] doesn't appear to be re-opening in short term, as [the] US market appears to be stable or company, while Asia market is weak right now," an investor said Wednesday.
The spread in between Asia's benchmark CFR Taiwan as well as FOB USGC isomer-MX rates dove to a five-month low of minus .06/ mt Tuesday, down .30/ mt from the previous day, Platts information revealed.
Its last reduced went to minus 4.05/ mt on September 19, 2012.
Traders have actually been eyeing the re-opening of the arbitrage theoretically since mid-February with the easing of USGC isomer-MX prices, which dropped from a five-week high of 466 cents/gallon (,411.98/ mt) on February 11 to a three-month low of 442 cents/gal on March 4. This saw the Asia-USGC spread increasing in tandem to a four-week high of .09/ mt on February 26. However drilling mud additives have because tightened, turning into negative area on March 1, being up to minus .76/ mt Monday as a sluggish downstream paraxylene market in Asia took down isomer-MX rates. Falls were even more expanded Tuesday, after the USGC rate rallied 10 cents/gal to be analyzed at 452 cents/gal, against a much more gentle day-on-day rebound of /mt in the CFR Taiwan isomer-MX cost. For arbitrage business economics to be practical, the Asia-USGC spread should be above /mt, based upon a term charter freight price from USGC to South Korea and Taiwan.
Place freight rate for the same course is currently heard at /mt for a 5,000-mt BTX freight. The USGC-Asia arbitrage theoretically has been closed for more than three months given that November 20, when the spread was at .99/ mt. Commonly, 800,000 to 1 million mt/year of US-origin isomer-MX moves to Asia, which is structurally short.
Meanwhile, a tightly-shut paper arbitrage has provided a flooring to Asian isomer-MX costs that are under stress from falling downstream costs. "Closure of the US-Asia isomer-MX arbitrage on paper has actually reasonably supported Oriental isomer-MX rates amid nosediving downstream PX as well as slow detoxified terephthalic acid markets today," a market resource stated.
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