18 September 2008 17:04 [Source: ICIS news]
LONDON (ICIS news)--The timing of European paraxylene (PX) contract negotiations was uncertain as Asian contract negotiations for September seemed to have stalled completely, market sources said on Thursday.
This week, Asian PX prices dropped to $1,080-1,095/tonne CFR (cost, insurance, freight) Taiwan in the spot market, down from the year’s peak of $1,705/tonne in May.
Producers’ nominations for September, however, had been announced at $1,460/tonne and $1,500/tonne CFR Taiwan, showing a clear discrepancy between current buy and sell ideas.
With the Asian September contract negotiations at a stalemate, European PX players became anxious as to when they should start their own talks.
“It is a difficult situation, this is the second month in a row where there is a black hole,” one European producer said, adding that he was already trying to get hold of customers to see how much longer European players would want to wait until they started their own talks.
Traditionally, European PX contracts are settled on the basis of the Asian Contract Price, or ACP, with the Asian region a major force in the production of downstream polyethylene terephthalate (PET) and purified terephthalic acid (PTA).
Last month, however, Asian talks were long overdue and some European players started preliminary negotiations before the ACP was settled.
The European August contract price was settled at €980/tonne free delivered (FD) Northwest Europe (NWE), down €105/tonne from July.
When asked what their expectations were for September, most players declined to comment. Producers and buyers seemed to agree that demand and spot activity was slow, indicating that the contract price might go down.
One downstream PET consumer said that it was hopeful that the European contract would settle at a drop of €130/tonne, based on the tumbling Asian and European spot numbers.
The current European PX bid/offer spot range was assessed at $1,060-1,071/tonne (€742-750/tonne) FOB (free on board) Rotterdam by global chemical intelligence service ICIS pricing.
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