Conflicting factors keep US October PX contracts unsettled

14 October 2009 18:08  [Source: ICIS news]

HOUSTON (ICIS news)--An ongoing standoff between US paraxylene (PX) contract buyers and sellers continued on Wednesday as the clashing factors of lower benchmarks in other regions and higher energy prices delay October settlements.

"From a cost perspective, producers are looking at increases in feedstock costs and customers are trying to get horrendously low prices," said a supplier involved in contract negotiations. "Those two things don't jive."

Buyers have petitioned for decreases to at least mirror the October Asian Contract Price (ACP) and European benchmark, which both settled down by about 9 cents/lb ($198/tonne, €133/tonne).

The US PX supplier said that buyers are seeking even deeper cuts than 9 cents/lb amid a well-supplied North American market.

September's US benchmark of 51.25 cents/lb was steady from August after producers maintained that prices should be on par with rolled over contracts in the other two main regions. 

A 9 cent/lb decrease in the US PX contracts would put the benchmark at 42.25 cents/lb, above current US Gulf spot prices at 36.29-37.19 cents/lb, according to data from global chemical market intelligence service ICIS pricing

US producers used rising energy prices as ammunition to counter buyers' push for decreased contracts, pointing to an increase in crude oil and natural gas values from September to October.

NYMEX October WTI crude oil futures contracts were in the high-$60s to low-$70s/bbl throughout September trading, while this month's November contracts are trending higher into the mid-$70s/bbl.

In the natural gas futures market, fronth-month November contracts have traded in the high-$4s/MMBtu, up from October futures prices in the mid-$3/MMBtu.

Major US PX producers include ExxonMobil, BP, Chevron Phillips Chemical and Flint Hills Resources.

($1 = €0.67)

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

By: Ryan Hickman
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