Europe PX negotiations prolonged on Asia rollover

04 February 2008 17:57  [Source: ICIS news]

LONDON (ICIS)--Negotiations for European February paraxylene (PX) contracts were set to be prolonged, buyers said on Monday, as precedent-setting initial settlements were heard at a rollover in Asia.

A first Asian contract price (ACP) was reported at $1,100/tonne (€748/tonne) CFR (cost and freight) Asia, at a rollover from January.

This was departure from nominations heard in the region for increases of $80-140/tonne and changed the face of European negotiations, consumer sources said.

January contracts were settled at €793/tonne FD (free delivered) NWE (northwest Europe).

At current exchange rates, this would mean that European contracts were at a €45/tonne premium over their Asian counterparts; European contracts have traditionally settled in line with Asia.

Neither buyers, who felt prices were too high, nor sellers, who discussed eroded margins, had been pleased by the January settlement.

“If it’s a rollover then we are paying a massive premium over Asia,” said one major European buyer, who confessed himself “very happy” about the news.

“I said last quarter, when they rolled over, that we should see a decrease in Europe to bring the contracts in line.”

Another source at a major purified terepthalic acid (PTA) producer said that buyers would doubtlessly push for decreases, but did not foresee the negotiations being easy.

“We want to try and regain parity with Asia,” the source said. “Obviously, that means we will be targeting a large decrease, which is going to be a difficult conversation.”

A source at a key contract-settling producer echoed this sentiment, saying that there was “no way” that a decrease of any kind would be possible.

($1 = €0.68)

By: Peter Salisbury
+44 20 8652 3214

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