07 December 2011 16:54 [Source: ICIS news]
LONDON (ICIS)--The European December paraxylene (PX) contract settled at €1,050/tonne ($1,400/tonne), a €70/tonne drop from November, producers and consumers confirmed on Wednesday.
“I can confirm the contract has settled at €1,050/tonne,” a buyer said. “I think it is a calm market right now, and a lot quieter than usual at this time of year,” the buyer said.
The settlement was agreed on a free delivered (FD) northwest Europe (NWE) basis.
While a significant decrease was expected in line with the $110/tonne reduction for the Asian PX contract price, sources said that current exchange rate dynamics helped to ease some of the downward movement this month.
A producer said it had reluctantly followed the initial settlement, citing current market conditions as the key reason, adding that the derivative purified terephthalic acid (PTA) sector needed clarification on the contract price to effectively liaise with their customers.
The European PX contract price typically settles once an agreement has been made in Asia on the ACP (Asian Contract Price). A major settlement for the December PX ACP was reached on 30 November at $1,390/tonne CFR (cost and freight) Asia. Most major producers and end-users have settled the benchmark price for the month at this figure.
However, a sole Hong Kong-based end-user said the ACP settlement was “not the right level to reflect the current appropriate economics for [the] PTA industry” and will be seeking a separate resolution with their term suppliers.
The November PX ACP had fully settled at $1,500/tonne CFR Asia.
The PTA market has been described as long, despite export activities and recent outages. However, pre-buying activities among polyethylene terephthalate (PET) players, coupled with a sense that some sources have that demand in the dominant Asian polyester market may pick up, could have prompted some higher PET operating rates, sources said.
PX is the largest volume xylene isomer. Around 98% of PX is consumed in the polyester chain, mainly in the production of fibre, film and PET bottle resins, via one of two intermediates: PTA or dimethyl terephthalate (DMT). A small amount of PX is used as a solvent, and to produce di-paraxylene and herbicides.
($1 = €0.75)
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