JAPAN CRISIS: Firmer aromatics prices expected on slashed output
Singapore (Platts)--14Mar2011/631 am EDT/1031 GMT
Aromatics prices are expected to firm as Japan's aromatics production has
been curtailed as result of the massive earthquake that struck on Friday
Emergency shutdowns were carried out Friday at several aromatics plants
across the quake-stricken northeast region.
JX Nippon Oil & Energy shut its aromatics units and refineries at Sendai,
Kashima and Negishi, which have a total benzene capacity of 425,000 mt/year.
At Sendai, JX Nippon operates a continuous catalytic reformer, which has
a capacity of 30,000 b/d, while a sulfolane unit can produce 90,000 mt/year of
benzene and 300,000 mt/year of mixed xylenes. At Negishi, up to 145,000
mt/year of benzene can be produced from reformate while Kashima has a 190,000
mt/year benzene unit. Until the quake, the aromatics plants were running at
100% of capacity.
At Chiba, JFE Chemical has shut its coal-based aromatics plant, which can
produce 120,000 mt/year of benzene and an estimated 36,000 mt/year of toluene
and 40,200 mt/year of solvent-grade mixed xylenes.
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A JFE source was unable to provide further details of the shutdown, as
the company was still in the midst of collecting data on the damage caused to
As of Monday afternoon, May bids for benzene were as high at $1,175/mt
FOB Korea, about $10/mt higher from deals concluded at $1,165/mt on Friday
Nevertheless, JFE Chemical's shutdown of its aromatics plant in Chiba
will take out production of about 36,000 mt/year of toluene.
But traders in Asia noted that the quake's impact on toluene would be
more indirect compared with other aromatics, as most of the plants that shut
did not produce toluene. "[There's] no real toluene plant in northeast Japan,"
said a trader.
Despite a fairly consistent supply situation, some traders felt toluene
prices could still firm on higher downstream demand.
On Monday morning, the toluene curve flattened as bids and offers in the
earlier laycans rose while those for the later laycans fell. The FOB Korea
marker gained $6/mt to $1,042.50/mt compared with Friday. Friday's toluene
price was unchanged from Thursday despite the quake.
"Paraxylene prices fly, mixed-xylene prices fly, if C2 is short, styrene
monomer prices go up, then it will push benzene, and toluene
disproportionation operations will run," said a trader. Firm prices could also
delay near-term planned turnarounds, boosting demand for toluene in the spot
Gasoline-blending could also increase, due to "the lack of fuel such as
diesel, gasoline," said a trader.
Since Friday, a fire continues to burn at Japanese refiner Cosmo Oil's
220,000 b/d Chiba facility at Tokyo Bay.
"The top priority in Japan is to produce more gasoline. The government
has advised the refineries to do so," said a Japanese trader. "I may need to
buy spot cargoes or from other countries to cover my contracts as my inventory
is low," the trader said.
With power cuts and downed phone lines, aromatics producers were still
trying to ascertain the full extent of the earthquake's impact on their
On Monday, a source at Maruzen Petrochemical was unable to comment on its
130,000 mt/year hydrodealkylation unit and aromatics plant at Chiba. The plant
can produce of 200,000 mt/year of benzene, 85,000 mt/year of toluene and
72,000 mt/year of solvent-grade mixed xylenes.
Meanwhile, the isomer-MX market was active Monday morning with several
bids heard for both April and May cargoes despite the dearth of sellers in the
market. "With all this going on, MX will be short," said a Singapore-based
It was unclear if the Cosmo Oil fire will affect the company's plan to
start up its new 300,000 mt/year MX plant at its Yokkaichi refinery, central
Japan, in November 2011.
Cosmo Oil's subsidiary, CM Aroma, runs a 270,000 mt/year MX plant at
Chiba, eastern Japan, but the operational status of the plant could not be
Also unclear was the situation at four styrene monomer plants located in
Chiba and belonging to Idemitsu Kosan, Nihon Oxirane, Chiba SM and Denki
Idemitsu's 210,000 mt/year plant at Chiba was confirmed to be "running as
normal" Monday, a company source said, although he could not reveal the
plants' operating rate.
The other SM producers could not be reached.
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