Europe PTA sellers look to manage costs

03 July 2008 17:04  [Source: ICIS news]

LONDON (ICIS news)--European purified terephthalic acid (PTA) sellers were looking at least to cover record upstream costs in June and July, as production returned to normal levels, they said on Thursday.

“We are talking about a whole new level of cost so we can’t just continue talking as we used to. Just talking about margins in terms of paraxylene (PX) plus or minus doesn’t reflect the market,” said one PTA producer.

The seller added that it had been looking for a little more than the June PX pass-through equivalent on its contract talks, although other producers reported business up €62/tonne ($98/tonne), which was the pass-through level.

PTA pricing is closely aligned to PX, so reports of 13-year high spot PX business on Thursday was a concern to PTA players.

PTA sources were expecting another major increase in the Europe July PX contract, based on the Asian PX settlement, up $185/tonne.

PTA sellers would then try and at least pass on this increase to consumers, they said.

European PTA output sounded healthier for July, with Interquisa and BP both running normally and recently lifting force majeure restrictions.

BP lifted force majeure from its 1m tonne/year Geel plant in Belgium on the midnight of 22 June and had since returned stocks to fairly typical levels.

The ability to absorb costs was the main talking point from the polyethylene terephthalate (PET) sector, which was not only faced with higher PTA costs but also with a firming monoethylene glycol (MEG) market.

PET sellers have so far announced target increases of €100-150/tonne for July.

($1 = €0.63)

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By: Edward Cox
+44 20 8652 3214

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