Japan, South Korea include Argus in 2020 PX term deals

At least three major producers of paraxylene (PX) have settled term contracts for 2020 delivery on a formula that includes an Argus cfr Taiwan/China spot assessment component.

Japan's JXTG Nippon Oil & Energy, as well as South Korea's GS Caltex and SK Global Chemical (SKGC), have sealed contracts with various northeast Asia-based buyers against 50pc Asia Contract Price (ACP), 50pc spot cfr Taiwan/China assessments.

The 50pc spot calculations will be on a 50pc Argus and 50pc Icis pricing basis. In an absence of an ACP settlement for the month, the formula will default to 50pc Argus, 50pc Icis. This is a shift from previous contracts that were extensively reliant on Platts cfr Taiwan/China spot assessments.

These contracts were possibly provisionally agreed at discounts of 50¢/t to a premium of $1/t to the same formula, although this could not be confirmed. S-Oil had previously sold an undisclosed volume of PX termed as a "non-ACP portion" to China's Shenghong Petrochemical at a 50¢/t discount to the 50pc ACP, 50pc spot cfr Taiwan/China assessment. The 50pc spot calculation in S-Oil's supply contract is on a 35pc Argus, 35pc Icis and 30pc Platts basis.

JXTG Nippon Oil & Energy had already committed up to 70pc of its 2020 target production, without disclosing the actual amount of PX it sold. It has stakes in 12 production units in Japan and South Korea and is capable of manufacturing 3.62mn t/yr of PX. But it plans a further 10pc cut in operating rates because of negative margins, operating its aromatics facilities at an average of 70pc starting in January.

GS Caltex had already committed more than 100pc of its production capability for term 2020 contracts. It operates three PX units in Yosu that can produce around 1.35mn t/yr of the fiber intermediate feedstock.

SKGC did not specify how much PX it had sold for 2020 term deliveries. The company operates three PX units in Ulsan and Inchon with a combined nameplate production capacity of 2.1mn t/yr. It also has a 50pc stake in the 1mn t/yr Ulsan Aromatics complex in a joint venture with JXTG Nippon Oil & Energy.

By Suzi Shin