Mixed market dynamics for Xylene in India; an in-depth analysis – 25 Mar 2014

The price for Ortho Xylene has fluctuated considerably in the past few weeks in the Indian market due to domestic turnaround and import availability. On the other hand, the prices of Mix Xylene haven't fluctuated significantly in the Indian markets on any strong indicator, but the demand for the aromatic has been moderated in major markets due to its  substitutability with other solvents. In this market review, Indianpetrochem provides a comprehensive view on the demand and supply situation for the aromatics in India at present.

RIL (Reliance Industries Limited) is a dominant player for Mix Xylene and Ortho Xylene in India with installed capacity of 15,000 tonne per annum and 1,50,000 tonne per annum, respectively.

On 10th March, 2014, RIL closed down its Ortho Xylene manufacturing unit for a period of 40 days, according to Indianpetrochem sources. As a consequence of this, the Ex-Mumbai prices which were previously at Rs. 94 per kg (exclusive of all taxes, imports) spiked to Rs. 98 per kg (exclusive of taxes, imports), dues to shortage in supplies. However, this was a short lived situation in the market as bulk imports replenished the markets with new stocks. Resultantly, the prices at present have stabilized at Rs. 92-94 per kg (exclusive of taxes, imports), and some traders in the market speculate that the prices may go down further as new imports hit the Indian shores.

"The price differential between RIL Ortho Xylene and imports is considerable, whereby the former sells at Rs. 106 per kg (basic prices) and latter in the range of Rs. 92-98 per kg. As such, there is a market expectation that when RIL resumes operation there will be a downward price revision on its basic price", a Ahmedabad trader informed the website.

The demand for Ortho Xylene is weak to moderate in the Ahmedabad and Mumbai market while the stock position is stronger in Mumbai market, which comparatively has weaker demand than Ahmedabad for the aromatic.

For Mix Xylene, RIL goods are more cost competitive than imports, where the former is priced at Rs. 75 per kg (exclusive of all taxes) and latter within the range of Rs. 81-83 per kg (exclusive of all taxes). Consequentially, traders, specifically in Ahmedabad, prefer RIL stocks against imports while building their stock inventories.

The demand for Mix Xylene is weak in the Mumbai and strong in Ahmedabad market.

"The demand for Mix -Xylene is weak as uptakes from paint and resins industry has been poor in Mumbai. Additionally, most users are substituting the aromatic with Toluene, which currently is more cost competitive", a Mumbai based trader reported Indianpetrochem.

At the other end of the spectrum, traders in Ahmedabad market note significant off takes from these sectors with RIL being the preferred brand amongst end users, also traders in the market hold good stock inventory for the aromatic.

In general, our market reporters in Delhi have noted weak demand for Mix and Ortho Xylene in the market, on account of which the open market prices have declined recently. However, there is an anticipation amongst traders that the demand should gain momentum in the first week of April, after the financial closing.