EPCA '09: Europe Oct OX confirmed at €615/t, gains more support

05 October 2009 09:37  [Source: ICIS news]

BERLIN (ICIS news)--The European orthoxylene (OX) contract price for October has been confirmed at €615/tonne ($898/tonne) as the initial settlement received further support from players on Monday.

The contract was settled on a free on board (FOB) northwest Europe (NWE) basis.

Speaking from the sidelines of the 43rd European Petrochemical Association meeting, one of the buyers involved said they felt that producers had initially been reluctant to drop prices in October.

"We have to look at the wider situation," said one of the buyers involved. "We have seen decreases for mixed xylenes and gasoline."

In light of the significant decrease seen for October paraxylene (PX) contracts in Europe, some suppliers were pushing the notion that OX would have to support the PX sector.

However, another source conceded that downstream buyer interest remained weak.

"Downstream, demand for phthalic anhydride (PA) is still not very strong," the source explained. "It has recovered from Q1 2009 levels but it is still a long way from normal."

Another consumer source agreed that demand was still very low in Europe. "We initially proposed a decrease of €50/tonne and the supplier pushed for €40/tonne, so eventually we came to a compromise," the source said.

One seller said: "We do not expect demand to pick up in Q4. If we can maintain September and October levels we will be happy."

A player in the PA market speculated that the OX sector would see shutdowns and some idling of plants later in Q4 to help regulate the supply/demand balance.

"We will have to see what happens in 2010. If demand fails to pick up, some of these shutdowns may have to become permanent."

($1 = €0.69)

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By: Truong Mellor
+44 208 652 3214

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