25 November 2010 06:51 [Source: ICIS news]
By Bohan Loh
SINGAPORE (ICIS)--Asian paraxylene (PX) prices are expected to remain buoyant on the back of continued buying interest from downstream purified terephthalic acid (PTA) makers, market sources said on Thursday.
“There are still end-users’ interest in securing cargoes for the January delivery month around the $1,260-1,270/tonne (€945-953/tonne) CFR (cost & freight) Taiwan and or China Main Port (CMP),” said a China-based trader.
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They added that they planned to secure the molecule through the spot market.
Asian PX prices have been on a firm uptrend since July, but suddenly surged in mid-October to touch $1,365-1,375/tonne CFR Taiwan and or CMP by early-November.
The uptrend comes on the back of a series of unscheduled maintenance at China-based makers and a force majeure declaration by Aromatics Oman.
Prices subsequently eased to around $1,275-1,285/tonne CFR Taiwan and or CMP on Thursday afternoon after Aromatics Oman restarted its Sohar-based 800,000 tonne/year PX unit on 19-20 November.
“Sentiment hasn’t been as bullish as before, but market fundamentals remain solid for PX prices to continue trading at the current level,” a northeast Asian trader said.
“Moreover, margins remain great for PTA makers,” the trader said. “They shouldn’t have any problems paying for PX for such levels.”
With PTA prices hovering around $1,150-1,160/tonne CFR CMP, market players estimated that PTA producers were enjoying a profit margin of around $180-190/tonne.
With the upcoming settlement of the December PX Asia Contract Price (ACP) on 30 November, some market players are also expecting a select group of northeast Asian-based traders to begin bidding up the spot market in hopes of a higher ACP settlement.
The monthly ACP benchmark is negotiated separately from prevailing spot prices among three producers and five buyers.
The three producers are JX Nippon Oil and Energy, Idemitsu Kosan and ExxonMobil.
The five buyers are Mitsui Chemicals, Mitsubishi Chemicals, China American Petrochemical, Oriental Petrochemical Taiwan Corp and BP.
However, current spot prices and market sentiment inevitably influences the level at which the ACP is concluded, according to market sources.
JX Nippon Oil and Energy has proposed a December ACP of $1,320/tonne CFR Asia, while both Idemitsu Kosan and ExxonMobil nominated a contract price of $1,350/tonne CFR Asia.
The nominated prices represent a $100-130/tonne increase from the November ACP of $1,220/tonne CFR Asia.
($1 = €0.75)
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