18 October 2005 13:23 [Source: ICIS news]
In the ICIS news story headlined “Split settlement possible for Euro Q4 cyclohexane” published on 17 October, the fourth paragraph should refer to one producer continuing to target a Euro150/tonne delta while another was looking into the possibility of a split settlement. A corrected story follows in full.
LONDON (ICIS news)--The first European Q4 cyclohexane settlement looks to be in dispute as two major producers pushed for a bigger increase citing higher feedstocks costs and industry officials said on Monday that a split was in the offing.
The two producers insisted that the Euro126/tonne contract delta agreed by BP Refining and Petrochemicals (BPRP) does not represent the market. The settlement had been confirmed between BPRP and two major customers and the producer has indicated that Euro126/tonne will also form the basis for settlements with all its customers.
The agreed delta represents a rise of Euro19/tonne or 17% on the third quarter agreement of Euro107/tonne. This would yield an October contract price of Euro857/tonne free on board (FOB) Northwest Europe (NWE), up Euro85/tonne in line with the October benzene contract settlement. While consumers were not particularly happy about the delta increase, the hike could have been much steeper, one buyer said.
One of the producers yet to settle has welcomed recognition from buyers that a price increase was necessary but said a delta of Euro126/tonne was insufficient to cover the growing costs of fuel oil and hydrogen. A source at the company said it would continue to target a Euro150/tonne delta while another producer said it was looking into the possibility of a split settlement.
Despite attempts by these producers to look for a higher settlement at least one major buyer said the Euro126/tonne delta was likely to stick, even if it takes some time for producers to accept it.
Market views remain mixed and one trader said the view that a second number was likely to prevail if it can be agreed upon.
Dissatisfaction with the delta had been a recurrent theme in 2005. Producers have contested settlements in both the second and third quarters this year, with at least one, Huntsman, rejecting outright the third quarter delta in favour of “fallback provisions”.
Some producers were now beginning to question the validity of the market settlement mechanism for cyclohexane, one production source said. Meanwhile, sellers said that fourth quarter negotiations were expected to continue for several more weeks.
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