The US' 60-day waiver of domestic shipping requirements under the Jones Act may change the trade flows of paraxylene (PX) and aromatic blendstock in the near-term, sending US Gulf coast production to US Atlantic coast consumers.
PX consumers based on the US Atlantic coast (USAC) largely rely on imports from overseas for their needs. Saudi Arabia, South Korea, Brunei, the Netherlands, Taiwan and India were all sources of US PX imports before US-imposed tariffs starting last year shuffled the deck. Saudi Arabia has since become the majority PX trade partner, accounting for over 50pc of flows, according to US Census Bureau data compiled by Global Trade Tracker.
But with the US-Iran war bringing vessel movement through the strait of Hormuz to a virtual halt, supplies have tightened for several products, including PX and feedstocks. This has boosted PX prices by $365.65/t since the war began on 28 February to $1,438.73/t on 13 March, according Argus' most recent weekly assessment.
PX produced at the US Gulf coast (USGC) is typically consumed within that region, so shipping cargoes to USAC consumers has not been a factor in trade. But the rise of USGC 5211-grade MX since 28 February by 102¢/USG to 389.5¢/USG through 18 March — combined with the 60-day Jones Act waiver — may change that.
Market sources tell Argus the higher prices and temporary removal of the higher costs associated with the Jones Act could prompt greater USGC PX production to ship to the Atlantic coast.
The waiver could also boost shipments of USGC toluene and MX to the USAC for gasoline blending, another source said, although US blenders tend to prefer alkylate from Europe over reformate or aromatic blendstocks. Alkylate imports are exempt from US tariff policy because of their use in the energy sector.
Benzene and styrene shipments will largely be unaffected by the Jones Act waiver because many of those consumers are tied in with refineries, pipelines or receive their volume from inland barges, another source said.
