13 October 2010 10:32 [Source: ICIS news]
LONDON (ICIS)--European fourth-quarter cyclohexane (CX) contract delta discussions continue as producers’ and consumers’ price ideas remain wide apart, market sources said on Wednesday.
“I did not agree and I am wondering if I am even close. The delta should go up because there is an appetite among producers,” said a CX producer, referring to the delta discussions.
While the producer did not quote a firm figure, it said that it was targeting “well above €140/tonne ($194/tonne)” since the delta should be much higher than the third-quarter delta.
The third-quarter CX delta was agreed at €135/tonne, down €3/tonne from the previous quarter. The reduction was largely based on improved availability.
A second producer and settler of the delta said that it was seeking an increase of €10/tonne for the fourth quarter.
Producer sources also pointed out that since the start of the delta negotiations, crude prices have continued to firm.
One seller said that negotiations had been delayed by the 44th annual European Petrochemical Association (EPCA) meeting held in ?xml:namespace>
However, some CX buyers said that they had been expecting to settle the delta during the EPCA meeting, if not before.
One major buyer said: “I would not say that the difference is so wide, but I am looking for a reduction. This is based on the supply and demand, exchange rates and the good development of producers’ margins.”
The buyer added that it had been ready to close its negotiations during EPCA.
A second major CX buyer and settler of the delta said that he, too, had been hoping to close fourth-quarter contracts ahead of the EPCA meeting.
“The price ideas are just getting wider. When I started the discussion, there was a number close to a rollover. Then all of a sudden I was informed that some producers wanted above €140/tonne and this was a surprise to me,” he said.
The buyer added that it was now looking for a reduction in the delta largely based on availability.
“There is no tightness. I would not say it’s even balanced. The market is balanced to long,” he said.
Another buyer said: “I am insisting on minus €5/tonne and all the buyers are set for minus €5/tonne. If all buyers insist on one number, well, this is where the market should be.”
Demand for caprolactam and adipic acid remains strong, and producers of both materials said they expect this trend to continue into 2011, largely driven by strong growth in
CX is a raw material for the production of caprolactam and adipic acid, which are used in the production of nylon. CX is produced by reacting benzene with hydrogen.
($1 = €0.72)
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