South Korea's aromatics exports saw a broad retreat in January, as tightening domestic supply availability capped outbound liquidity despite healthy market interest.

According to the latest Customs data, South Korean exports of Paraxylene (PX) retreated 3% month on month to 473,331 metric tons in January as the market grappled with a shift in regional availability. This downward adjustment was primarily driven by a tightening of domestic supply, as local producers prioritized internal consumption that limited the volume of spot cargoes available for outbound shipment.

Widening spreads between PX and naphtha, in contrast to increasingly sluggish gasoline margins, incentivized several South Korean refiners to ramp up or restart their toluene disproportionation (TDP) and transalkylation (TA) units. While this strategic pivot toward PX-rich output added localized supply, the surge was not uniform across the industry; it was effectively counterbalanced by other producers sustaining reduced operating rates, leaving January with a mixed PX supply balance.

Simultaneously, the export landscape was further pressured by a deepening supply glut in China--South Korea's primary export destination. Rising local supply and high inventory levels reduced the urgency for imported volumes and the convergence of restricted domestic liquidity and an increasingly self-sufficient Chinese market effectively dampened trade flows.

While January maintenance at Zhejiang Petrochemical's reformer unit, Sinopec Tianjin Co's 350,000 mt/year plant, and Sinochem Quanzhou Petrochemical Co's 800,000 mt/year plant limited aromatics output, the Chinese PX supply landscape remained robust due to several ongoing turnarounds being offset by high operating rates elsewhere.

According to industry sources, Chinese producers capitalized on this stability by keeping operating rates firm, with the average operating rate for PX plants reaching a substantial 86.9% by the end of January. This surge in self-sufficiency effectively saturated the local market, creating a supply buffer that capped import requirements and cooled demand for South Korean cargoes.

Consequently, South Korea's PX exports to China fell by 5.6% month on month in January, settling at 408,888 mt. This shift in trade flow was further underscored by a total absence of PX exports to the U.S. during the month, a void largely attributed to shifting arbitrage economics and heightened tariff uncertainties in the American market. Conversely, outbound shipments to Mexico surged to 23,039 mt, marking a significant pivot as this represented the first major PX cargo movement to the country since December 2022, when volumes reached a similar 22,932 mt, customs data showed.

The widening PX-mixed xylene $(MX)$ spreads in January--which averaged $171.68/mt, reflecting a 6.7% month on month increase according to OPIS data--fundamentally restructured the production incentives for South Korean refiners. These elevated spread levels reached a threshold where even non-integrated producers found it economically viable to purchase MX as a direct feedstock to boost Paraxylene output.

This increase in internal MX consumption by local PX units triggered a supply-side squeeze in the spot market. The surge in domestic MX demand capped the volumes available for the export market, leaving South Korean supply tightly balanced and further restricting outbound shipment liquidity in January.

South Korea's January MX exports fell 5.6% month on month to 36,672 mt, while imports surged by 124% to 47,795 mt, flipping the nation into a net-importer role to sustain domestic Paraxylene production. This supply rebalancing saw Japan emerge as the sole source for MX imports, while exports were primarily diverted to China (21,752 mt), India (8,622 mt), and the UAE (3,815 mt).

The consistent rise in demand for MX throughout January directly catalyzed a firming of spot prices, which climbed 4.2% month on month to an average of $726.32/mt FOB Korea, according to OPIS data.

Looking ahead to the February-March window, South Korean PX operating rates are projected to accelerate as producers capitalize on reformate netbacks that continue to favor aromatics extraction over gasoline blending. According to Chemical Market Analytics, this shift is expected to drive higher aromatics throughput, with refiners likely to ramp up spot market procurement of MX to maximize PX yields and capture prevailing margins.

South Korea's benzene exports experienced a sharp 21.8% month on month drop in January, falling to 233,332 mt as the market faced significant headwinds in its primary trade markets. Shipments to China--traditionally South Korea's largest outlet--dropped by 12% to 209,584 mt, stifled by high local inventories. In addition, U.S. export volumes plummeted 83.5% to a mere 6,008 mt. Industry sources indicate that the Asia-to-U.S. arbitrage window remained shut throughout the month, as the combination of elevated Asian spot prices, high freight rates, and persistent tariff barriers made trans-Pacific shipments economically unviable.

While the underlying operating economics for benzene derivatives in China remained generally positive, fueling steady consumption throughout January, this demand did not translate into a boost for South Korean exports. Instead, demand for imported cargoes was severely stifled by a widening price disconnect between imported cargoes and domestic cargoes. As South Korea's monthly average benzene price surged 7.9% month on month to $712.88/mt FOB Korea, Chinese end-users favored local inventories reducing their reliance on imports.

Supply length in the Chinese market also increased due to fewer plant maintenance in January. Notable shutdowns include Sinochem Quanzhou Petrochemical's 645,000 mt/year plants in Fujian, Zhejiang Petroleum and Chemical Co's 650,000 mt/year plants in Zhejiang and Cnooc Ningbo Daxie Petrochemical Co's 100,000 mt/year plant in Zhejiang.

In contrast, South Korea's toluene exports surged by 26.8% month on month in January, reaching 86,019 mt. Shipments to the U.S. jumped 62.8% to 34,746 mt, driven by a seasonal uptick in gasoline blending demand; American refiners actively sought high-octane aromatics components even as Asian toluene prices rose faster than domestic U.S. nitration-grade material.

Simultaneously, exports to India experienced a massive 73.6% spike to 42,142 mt. Industry sources note that this surge was fueled by low inventory levels in India combined with a robust recovery in the downstream paints, coatings, and solvents sectors. This dual-engine demand growth from the U.S. energy sector and Indian industrial manufacturing provided a vital outlet for South Korean supply, offsetting the weaker performance seen in other aromatics like benzene and paraxylene.

Against this backdrop, the robust recovery in toluene demand fueled toluene price gains throughout January. According to OPIS data, the January monthly average toluene price rose 6.8% month on month to settle at $693.33/mt FOB Korea. In contrast to the surging export activity, South Korea's toluene imports retreated by 24.5% month on month to 46,881 mt.

This decline was most visible in shipments from South Korea's primary regional partners: imports from China fell 14.7% to 18,085 mt, while those from Japan slipped 17.6% to 28,796 mt. This decoupling of trade flows--where exports boomed while imports withered--highlights a strategic tightening of the domestic balance. South Korean producers optimized their internal supply to capitalize on lucrative arbitrage spreads in the U.S. and Indian markets.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Serena Seng, sseng@opisnet.com; Editing by Lujia Wang, lwang@opisnet.com

(END) Dow Jones Newswires

February 24, 2026 01:21 ET (06:21 GMT)

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