European Q4 OX talks in flux despite early first deal

03 October 2005 16:36  [Source: ICIS news]

LONDON (ICIS news)--The European orthoxylene (OX) sector market has yet to agree on a definitive fourth quarter contract price on Monday despite the first deal being settled late last week at Euro120/tonne more.

The original deal between Austrian phthalic anhydride (PA) producer Atmosa and Hungary’s MOL was confirmed by both parties last week at Euro730/tonne free delivered Northwest Europe (FD NWE), up 34% from the third quarter.

But other producers were holding out for a higher level of Euro760/tonne FD NWE, confident that buyers would step up to bids in the face of current supply woes. Consumers were so far unwilling to comment on the higher offer price and were hoping the Euro730/tonne FD NWE might be generally accepted.

Suggestions that French producer Total might agree at this price level were quashed when the company said their force majeure declaration on OX would exclude them from contract discussions.

The force majeure on PX and OX out of Total’s 110,000 tonne/year Gonfreville declared on 28 September was still in effect and there was no sign that the strike, which resulted in the closing of the plant, would end anytime soon, a source at the French major said.

The spot market on Monday reflected a tight supply/demand and firm price assessments on mixed xylenes. A producer confirmed the purchase late Friday of 1,000 tonne at a price in the low $900s/tonne FOB Rotterdam. No further spot business has been reported.

Shortages in the US after Hurricanes Katrina and Rita as well as high gasoline blend values increased price expectations for OX contract prices in Europe. Exxon’s force majeure on orthoxylene, declared on 13 September also lent strength to sellers’ arguments for higher prices.

By: Philippa Davies
+44 208 652 3214

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