26 October 2009 05:00 [Source: ICIS news]
By Bohan Loh
SINGAPORE (ICIS news)--Asian paraxylene (PX) has stagnated last week despite a near $4/bbl surge in crude prices as demand from its key downstream purified terepthalic acid (PTA) market has remained weak, industry sources said on Monday.
PX producers, anxious to generate margins, were trying to hike prices but buyers, expecting more supply to come in towards the end of the year, were not biting, they said.
PX managed to recover about a third of the $300/tonne (€201/tonne) it lost in August and September before its uptrend lost steam and stayed at $920-930/tonne CFR (cost and freight) ?xml:namespace>
PTA values were also largely stable at $830-840/tonne CFR CMP last week, according to the same data.
“I think PTA price movements have lost [their link to] fundamentals and are almost entirely dependent on the performance of the PTA futures contracts on the Zhenzhou Commodity Exchange (ZZCE),” said a regional market watcher.
The benchmark PTA futures contract on ZZCE for January 2010 delivery rose yuan (CNY)240/tonne to CNY7,510/tonne in Monday morning trade. Spot discussion levels for the fibre intermediate have risen on Monday to $855-875/tonne CFR CMP following better-than-expected sales by
“Most people are just taking a wait-and-see stance since crude is so volatile at the moment,” said Singapore-based PX trader.
Crude surged to a one-year high above $83/bbl last week, largely helped by the weakness in the US dollar and gains in the equities markets. At 12:31 hours
The cost of PX feedstock - naphtha - rose in tandem with crude, further squeezing margins for PX producers. First-half December price indications for Asian naphtha were pegged at $677.25-680.25/tonne CFR Japan, according to ICIS pricing.
“Producers are trying to raise prices to regain some profitability as naphtha costs continue to be a big squeeze on margins, but buyers are refusing to budge on expectations for added material availability towards the end of the year,” a regional trader added.
Some end-users in
But the start-up of the Shuaiba plant may be delayed for a month, and could provide a short-term boost to PX values, industry sources said.
PX makers have resorted to cutting operating rates from this month to limit supply availability and widen the current spread of around $240/tonne between PX and its feedstock naphtha.
The PX-naphtha spread has been hovering below the $250-300/tonne threshold that allows PX makers to break even over the past two to three weeks, market source said.
Producers have proposed a $160-190/tonne increase in their
Expectations regarding the settlement level have remained split, with some sources predicting prices to be concluded $10-20/tonne below prevailing spot PX values.
Others said that major producers would be seeking “compensation” for the partially settled October ACP that was widely perceived as being too low.
($1 = €0.67)
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