European PX buyers lower June price hopes as euro weakens

LONDON (CNI)--The dramatic drop in the value of the euro against the US dollar in the last few days has caused paraxylene (PX) players to rethink their expectations for June contract prices in Europe, consumers told CNI on Thursday.

“While we might have expected a big decrease in the price, since the drop in the euro value, our aspirations have been halved,” one consumer remarked.

Rejection of the European Union (EU) constitution by the French and Dutch this week has accelerated the euro's decline to an eight-month low against the dollar.

The partial settlement of the Asian contract price at $790/tonne CFR (cost and freight) Asia Pacific on Tuesday between a major paraxylene end-user and one western and one Japanese supplier will also mean a higher than expected European contract price.

The drop of $60/tonne in the Asian contract price is equivalent to around Euro49/tonne. The European contract price typically moves in line with the Asian price. After discounts, a drop of Euro20/tonne might be expected in the European contract price, according to some market observers.

Customers are disappointed with the development, but said they recognise that the price will be higher than expected, despite the still limited strength in the downstream markets.

At least one major producer has said that a rollover price might be realistic, although no official price has been announced.

The European spot price has also moved up since the settlement in Asia was reported and was today over $700/tonne (Euro571/tonne) FOB Rotterdam, up around $35/tonne from 24 May.