FocusPTA makers insist on higher Jan price

07 January 2008 06:23  [Source: ICIS news]

By Salmon Aidan Lee

SINGAPORE (ICIS news)--Several major purified terephthalic acid (PTA) makers are insisting that January contract prices be no lower than $890/tonne (€605/tonne) CFR (cost and freight) China after a relatively high settlement of feedstock costs, buyers and sellers said on Monday.

BP, Samsung Petrochemical, Mitsubishi Chemical and Mitsui Chemicals have proposed selling their January PTA at $890/tonne, citing squeezed margins. Others in Korea, Taiwan and southeast Asia had also started asking for similar prices.

Mitsui went a step further by telling their customers that their price was not negotiable.

The contract prices for October, November and December had yet to see full settlements. The September price was settled at $860/tonne after months of negotiations.

“We’re quite taken aback with such a price and such insistence,” said a source from Zhejiang Yuan Dong, one of the largest polyester producers in China.

As a result, last week saw many end-users out in the market bidding for spot cargoes at $840-850/tonne, as they felt that the $890/tonne price proposed by the majors as too high for them.

But the majors seemed to have good reasons for their actions.

“The Chinese domestic prices for contract volumes had been very low in recent months, for whatever reasons, but I don’t think import prices should be dictated by Chinese domestic pricing,” said a source from Formosa Chemical & Fiber Corp, a leading PTA producer in Taiwan.

In December, leading producers in China pegged their final prices as yuan (CNY) 7,300-7,400/tonne ($1,022-1,036) delivered, much lower than the import values of $850/tonne CFR China and above.

“We settled the December and January contract prices for paraxylene at $1,100/tonne [CFR Asia], and we’re now expected to sell so much below cost; we’d rather shut down,” said a source from Mitsui Chemicals.

Due to overcapacity in the PTA industry, PTA producers had been reeling under squeezed or no margins. As such, many producers had cut back on operations to minimise losses.

“We’ve to send a message out that we won’t sell at just any price,” said another Mitsui source. “By cutting back [operations], by insisting on this price [of $890/tonne], we believe it’s fair to everybody.”

($1 = €0.68)

By: Salmon Aidan Lee
+65 6780 4359

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly