29 March 2011 09:05 [Source: ICIS news]
SINGAPORE (ICIS)--Purified terephthalic acid (PTA) makers are eyeing an April paraxylene (PX) Asia Contract Price (ACP) settlement at below $1,700/tonne (€1,207/tonne) CFR (cost & freight) Asia as downstream buying appetite is weakening, market sources said on Tuesday.
A counter-bid for the April PX ACP was heard at $1,660/tonne CFR Asia earlier on Tuesday, against nominations made at $1,800/tonne CFR Asia by ExxonMobil, JX Nippon Oil & Energy and Idemitsu Kosan.
South Korea’s S-Oil proposed a contract price of $1,810/tonne CFR Asia for April deliveries.
The March PX ACP was settled at $1,655/tonne CFR Asia.
PTA makers were initially targeting a mid-$1,700/tonne settlement for the April ACP, but have since reduced their price ideas following the sharp drops in spot PX values.
Spot PX prices have shed nearly 7% in less than two weeks, after hitting a six-year high at $1,815/tonne CFR Taiwan/China Main Port (CMP) in mid-March. PX for May deliveries were last transacted at $1,690/tonne CFR Taiwan and/or CMP on 28 March, ICIS data showed.
Valuations have also flipped into a contango for the first time in nearly a year, as demand for prompt cargoes has dropped. The April/May intermonth spread was last assessed at a $5/tonne contango on 25 March, according to ICIS.
A contango is a pricing scenario where valuations of prompt deliveries are lower than those for future deliveries.
The monthly PX ACP is widely considered as a benchmark price on which almost all term-supply contract formulae are based. It is usually settled in the last week of the preceding month.
($1 = €0.71)
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