S Korea’s KP Chemical to hike May PIA prices by $50-100/tonne

24 April 2009 10:58  [Source: ICIS news]

SINGAPORE (ICIS news)--South Korea’s KP Chemical will hike its May offers for purified isophthalic acid (PIA) by $50-100/tonne (€38-76/tonne) due to squeezed margins and in anticipation of higher demand levels, a company source said on Friday.

The effort to increase price offers comes after the company hiked prices for April cargoes by $100/tonne, the source said, adding that customers have already accepted the initial price hike.

KP Chemical had told ICIS news in late-March that it was in the midst of implementing a price increase for its PIA parcels after Japan’s AG International Chemical (AGIC) raised prices for its products due to sluggish demand and squeezed margins.

A PIA end-user in China, based in Fujian province, acknowledged that raw material costs for producers have increased since the beginning of the year, and they had to pass the additional costs on to customers.

“I think they have to do this to survive,” the end-user said, adding that current PIA prices were around $1,200-1,250/tonne CFR (cost and freight) Asia.

Prices of feedstock metaxylene have been tracking persistently high paraxylene (PX) and orthoxylene (OX) values as well as isomer xylene numbers, the source from KP chemical said.

But because metaxylene is not commoditised, market players such as KP Chemical and AGIC could only peg their feedstock cost to PX, OX and isomer xylene prices.

Strong demand and tight supply pushed spot PX prices as high as $1,155/tonne CFR Taiwan this week before slipping back slightly to $1,120-1,130/tonne on Thursday evening, according to global chemical market intelligence service ICIS pricing.

KP Chemical has no intentions in the short term to increase production at its 250,000 tonne/year No 1 swing facility, which can produce both PIA and PTA, and it will maintain operating rates between 50-60%, the company source said.

PIA is used as a modifier in downstream polyethylene terepthalate (PET) bottle-grade resins and as an additive in coatings. It is also used to produce certain grades of polyester fibres.

($1 = €0.76)

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By: Bohan Loh
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