21 November 2005 16:20 [Source: ICIS news]
LONDON (ICIS news)--The European October purified terephthalic acid (PTA) prices have finally been agreed, after protracted negotiations, at a slight decrease in margins for some producers, industry sources said on Monday.
The average price increase for October was assessed at Euro92/tonne and PTA prices now stand at Euro1,081-1,106/tonne before discounts, according to global price reporting and market intelligence service ICIS-LOR.
PTA producers had hoped to pass on the full effect of October’s Euro140/tonne paraxylene (PX) increase but in some cases they fell slightly short of their target of Euro94-95/tonne. Some business was concluded at a margin rollover but a number of sellers were forced to reduce margins by up to Euro5/tonne, settling contracts at plus Euro89-90/tonne.
Buyers and sellers alike attributed this downward move to poor demand in the downstream polyethylene terephthalate (PET) market, which was under considerable downward price pressure. PET buyers and sellers have both indicated that the market was very weak with few expecting any pickup before January.
Pressure from Asia was also affecting Europe, with a number of European producers concerned about the possible influx of cheaper material. Spot prices in Asia continue to fall and now stand around $765-780/tonne cost and freight (CFR) China main port. Prices may weaken even further as polyester production languish at around 60% of capacity .
Like Europe, delays were also a feature of October contract negotiations in Asia. The contract price for October were only agreed after a one-month delay at a broad range of $820-860/tonne CFR China, according to ICIS-LOR.
European margins were fattened slightly in September after producers manage to secure a price increase of Euro45/tonne which was well above the Euro30/tonne increase in costs flowing from PX.
But negotiations for November business were pointing to the possibility of a further decrease in margins this month, several producers said. They were expected to pass at least the full benefit of the lower November PX contract settlement of Euro865/tonne, a decrease of Euro40/tonne, which works out to Euro27/tonne.
One producer said that the decrease may be in the range of Euro30-35/tonne amid reports that one settlement had already been made around this level. One major buyer said he expected a greater fall.
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