MX-PX
The MX part of the value chain has remained in good
demand/supply balance in all Global sectors.
An arbitrage window opened for the Western Europe market for supply to
North American and Asian region because MX increase was being resisted by
proportional PX increase. With lower
value being registered for MX, there was some arbitrage. In essence what this meant was a cost push in
the European sector was not being felt due to the sluggishness of the economy
as opposed to Asia and North America markets which remained responsive.
The US PX contract settlement for February was
proportionally higher than Asian contract settlement. The greater than parity settlement was part
of the recovery of the previous month, but is wide enough to limit PET arbitrage
opportunities into the North American market from Far East. PX-PTA supply chain is well balanced in all
sectors except Asia, where PTA overcapacity dominates. Spot values in Asia seeming very volatile, and
can lead to spot arbitrage opportunities, but with contract defining the logic
of the market, arbitrage opportunities will remain very limited and will not
affect supply demand conditions. Barring
any unprecedented crude oil pricing shift, PET pricing should remain flat at
best as crude oil prices are softening going into March. Traders have been speculative in the
Northeast Asian region by taking PX long/short positions; in face of increasing
demand as new PTA plant startups take place in China. This combined with the speculative nature of
the crude oil segment, which currently remains soft, could bring volatility in
the Heavy Naptha (MX-PX-PTA) side of the supply chain. But with currently modest downstream demand from the
PET sector any cost push impact will remain buffered.
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