Europe February PA rises €25-30/tonne on feedstock increases

04 February 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--European phthalic anhydride (PA) contract prices in February have increased by €25-30/tonne ($34-41/tonne) from January because of the need to recover margins following the €25/tonne rise in the monthly orthoxylene (OX) contract price, sources said on Friday.

ICIS assessed February PA contract prices at €1,185-1,195/tonne FD NWE for liquid material and €1,120-1,170/tonne FD NWE for flake.

Many PA contract players said they settled February prices at an increase of €25 from January, a straight pass-through of the OX price increase.

Producers that had been at the lower end of the January contract range managed to push through increases of €30/tonne to recoup margins, players said.

Poor consumption for PA in 2010, coupled with rising production costs, had eroded margins by around €200/tonne over the course of last year.

Spot prices of liquid material rose by €20/tonne at the low end to €1,100-1,150/tonne FD NWE because of the increase in the price of OX.

Flake spot prices were stable at €1,100-1,150/tonne FD NWE, and there were expectations that they would increase next week.

The PA market had been oversupplied, but an improvement in consumption – which sources attributed to restocking and firming buying interest in the downstream construction market – brought supply and demand back in balance.

The availability of flake material was reduced further because of a lack of imports, which resulted from escalating feedstock costs overseas, making material uncompetitive.

Players warned that there would once again be too much supply if imports re-enter the market.

($1 = €0.73)

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By: Mark Victory
+44 208 652 3214

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