11 July 2008 13:07 [Source: ICIS news]
LONDON (ICIS news)--Third-quarter cyclohexane delta negotiations have fallen into disarray after players settled at two different numbers, players said on Friday.?xml:namespace>
After an initial settlement was made between a producer and consumer in early June, a number of buyers had said that they would fight the €25/tonne increase on the second quarter delta of €155/tonne.
On 27 June, a second producer had settled a €170/tonne delta with two of its consumers, leading buyers with unsettled contracts to push for this lower number.
In cyclohexane contracting, a quarterly delta is set, which is used in conjunction with monthly benzene contracts to create a monthly number.
A single number has traditionally been set but with players adamant that two settlements had been made it seemed increasingly likely that monthly values would have to be given in a range, according to global chemical market intelligence service ICIS pricing.
In the case of July contracts, with benzene settled for the month at €840/tonne FOB (free on board) NWE (northwest ?xml:namespace>
With buyers and sellers now deadlocked in negotiations, it was widely recognised that a number of contracts were yet to be finalised.
“I have settled with one producer at €180/tonne,” said one consumer source. “At the time I looked at the oil price and the hydrogen environment and came in with a number. My contract partner came in with a higher number and we locked in at the middle.”
“But if there are producers who have done €170/tonne then we will do €170/tonne with them as well. The situation is that I am definitely not finished with my negotiations,” the source added.
A source at another consumer, who had settled at €170/tonne initially, said that it was resisting the higher number proposed in other contract negotiations.
“Basically, I am always looking at the costs of production,” the source said. “For us, the maximum increase was €10/tonne. At the moment, in fact, formula related contracts come out lower than the negotiated ones, which brings their competitiveness into question.”
Producers who were negotiating for further €180/tonne hikes, however, argued that energy costs alongside tightened supply of feedstock hydrogen were viable arguments for the increase, adding that with energy prices not diminishing it was important to remember that the delta was set for a three-month period.
($1 = €0.63)
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