US PX contract stalemate drags on as spot tumbles

21 November 2008 18:51  [Source: ICIS news]

HOUSTON (ICIS news)--A stalemate in November contract negotiations in the US para-xylene (PX) market could continue into December, with spot values notionally sliding and a holiday-shortened week looming, sources said on Friday.

"The market is totally dead," one source said.

The PX contract settled in October at 49 cents/lb ($1,080/tonne), down 17 cents/lb from September, according to data from global chemical market intelligence service ICIS pricing.

The PX spot market has been paralysed for weeks as collapsing demand and plunging values in related markets have kept buyers standing pat, waiting for a bottom to emerge.

PX spot offers fell to $625/tonne this week, down from $690/tonne at the end of last week. 

PX spot prices in the US market have in recent years been typically 5-10% below the prevailing contract price.

At the current notional spot bid-offer range of $600-625/tonne, the usual differential would suggest a contract range in the vicinity of 30-32 cents/lb or a drop of around 37% from the October settlement.

In relative terms that would be an even bigger drop than the 30% fall in the November contract for feedstock mixed xylenes (MX). The MX contract settled last week at $1.75/gal. down by 75 cents.

The November contract in the related ortho-xylene (OX) market was also settled last week, with a 34% fall to 33 cents/lb, down 17 cents.

A further slide in upstream benzene values this week has contributed to weak PX sentiment, as has a steady string of bad news for the chemical industry on both the domestic and global fronts.

With PX contract participants still wide apart on their ideas and US markets to be in a lull next week due to the Thanksgiving holiday, the chances of the settlement dragging into December seem strong, sources said.

Major producers of PX in the US include Flint Hills, Koppers and Stepan.

For more on PX visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Stephen Burns
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