Aromatics '05: Europe cyclo faces contract challenges

15 November 2005 12:30  [Source: ICIS news]

COLOGNE, Germany (ICIS news)--The European cyclohexane business is facing problems of contract pricing and hydrogen shortage, a senior industry official said on Tuesday.

David Hughes, aromatics commercial manager at Huntsman Petrochemicals UK, said the traditional system whereby cyclohexane has been priced as benzene plus a “delta” minus a discount has resulted in dissatisfaction all round.

Speaking at the Fourth European Aromatics and Derivatives Conference, he said cyclohexane buyers felt cheated because they “pay for 7% of the benzene they never receive”. Whereas sellers said they were hard done because the delta had not matched the inexorable rise in fuel costs over the past two years.

This has led to some players moving to a 'cost plus formula', using a calculation comprising of 0.93 benzene, 0.07 hydrogen, plus an element for costs and margin, Hughes said. The success of this new approach remains to be seen.

Global demand for cyclohexane was slightly under 5m tonne/year and growing only slowly, he said. Almost all of the demand came from the downstream nylon market, via adipic acid and caprolactam, with a small proportion going into polyurethanes via adipic acid.

The key issues facing the cyclohexane industry were both pricing and the future availability of hydrogen, Hughes said.

By: Barbara Ortner
+44 20 8652 3214

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