Asia PX players eye spot CFR Taiwan quotes for October contracts

28 October 2011 11:38  [Source: ICIS news]

SINGAPORE (ICIS)--Players in the Asian paraxylene (PX) market are increasingly looking at price quotes for spot cargoes to Taiwan, in which to base their settlement for October contracts, as negotiations drag on between buyers and sellers, market sources said on Friday.

Key customers of ExxonMobil were heard to have proposed using the average of  published spot CFR (cost and freight) Taiwan prices to settle the October contracts.

Market sources said that ExxonMobil is selling its PX on an 80% ACP (Asia contract price) plus 20% spot CFR (cost and freight) Taiwan quote formula since the start of the year.

On Friday, spot PX prices were assessed at $1,530-1,540/tonne (€1,071-1,078/tonne) CFR Taiwan and/or CMP (China Main Port), according to ICIS.

Aromatics major ExxonMobil is considered by most players as an important ACP negotiator.  Negotiations between ExxonMobil and its key customers could not agree on a price for October contracts since end-September, market sources said.

Recent volatile swings in PX prices and the squeezed margins of the main downstream purified terephthalic acid (PTA) sector have been making negotiations difficult between buyers and sellers.

Chinese PTA major Zhejiang Petrochemicals has settled its October contracts with PX suppliers Idemitsu Kosan and S-Oil at $1,620/tonne, but the price was rejected by other players.

Other key buyers said that PTA producers generate very little margin from this PX price. September PX ACP was fully settled at $1,655/tonne.

Japan’s JX Nippon Oil & Energy and Idemitsu Kosan have ceased negotiations with their customers and will be looking towards spot CFR Taiwan quotes as a fall-back price for contract settlement, according to sources.

However, there are also some players who feel that a settlement against published spot CFR Taiwan quotes is unfair.

“[Published] October prices are the valuation for November and first-half December physicals deals. It is not pricing in October physicals deals,” said a trader based in Singapore.

The Asia PX market typically trades around four to eight weeks forward.

($1 = 0.70)

For more on paraxylene, visit ICIS chemical intelligence

By: Bohan Loh
+65 6780 4359

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