Oct OX to settle next week, €30/t drop proposed

03 October 2008 10:33  [Source: ICIS news]

LONDON (ICIS news)--Europe orthoxylene (OX) contract talks for October are likely to be settled next week with one producer proposing a €30/tonne ($42/tonne) drop on a weak market and falling crude, players said on Friday.

 

The producer proposed a monthly contract price of €840/tonne, a consumer said, adding it had rejected the number as it was anticipating a further fall in upstream crude oil prices.

 

November Brent crude was currently trading on London’s ICE Futures under $100/bbl, having hit a record high of 147/bbl in July, its declining value on gains in the US dollar and worries over slowing demand due to the current economic slowdown.

 

Producers reluctantly agreed the October OX contract price should be reduced, with one supplier saying, “it is no secret that the OX market is weak”.

 

The downstream phthalic anhydride (PA) industry also continued to struggle, players said.

 

As Friday was a public holiday in Germany, and with some major OX players based in that region, it was likely that OX contract talks would only be concluded next week, source said.

 

European OX spot numbers were assessed at $1,170-1,210/tonne FOB (free on board) Rotterdam by global chemical market intelligence service ICIS pricing, while Asian numbers were at $1,060-1,080/tonne CFR (cost and freight) NE Asia (northeast Asia).

 

Last week, OX buyers in Europe proposed a decrease of €100/tonne and €120/tonne from the September contract price of €870/tonne FD (free delivered) NWE (northwest Europe), noting lower upstream crude prices and a discrepancy between Asian and European spot prices as the main reasons for the steep fall.

 

($1 = €0.72)

By: Madelon Ten Cate
+44 20 8652 3214

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