19 June 2008 16:51 [Source: ICIS news]
LONDON (ICIS news)--European cyclohexane consumers expressed concern on Thursday over a purported €25/tonne ($39/tonne) hike in third-quarter delta settlements, saying the increase was not representative of current market fundamentals.?xml:namespace>
A source at a major European producer said an agreement had been made with one consumer for a quarterly delta settlement of €180/tonne, on the basis of ongoing high feedstock costs.
The second-quarter delta was agreed within the market at €155/tonne.
Confirmation was pending from the consumer but buyers and sellers alike said that they had heard of the settlement.
In public European cyclohexane contracting, a delta is agreed on a quarterly basis and the number is added to the monthly benzene contract settlements during the period to give an outright price.
The contract is quoted on an ex-works (EXW) northwest Europe (NWE) basis, with June settled at €1,013/tonne EXW NWE, up €97/tonne.
Given that no negotiation was allowed for the cost of the key feedstock benzene and that the market was seen as balanced to long, buyers said, such an increase was not justified.
With their own downstream demand weaker than usual, many buyers said they were taking on lower than expected volumes.
“I was offered the €180/tonne but I turned it down,” a source at a major consumer said.
This would be more than simply retaining margins for producers, it would be an increase, and this was not justified, said the consumer, adding “an increase would be acceptable, given the current costs in the market, but not this.”
“Even hydrogen and energy costs, which are high, would not make up this amount,” another source said. “At this level, depending on how the July benzene contract settles, we could see imports from the ?xml:namespace>
($1 = €0.64)
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