16 March 2012 23:59 [Source: ICIS news]
LONDON (ICIS)--European phthalic anhydride (PA) March contract prices have risen by €70/tonne ($92/tonne) to a new record high, following a similar movement in the settlement for feedstock orthoxylene (OX), sources said on Friday.
PA contract prices finalised at €1,425-1,455/tonne FD (free delivered) NWE (northwest Europe) for liquid and €1,360-1,430/tonne FD NWE for flake. This is a record- high price for both liquid and flake contracts.
The previous record for liquid contract prices was €1,340-1,415/tonne, and for flake contract prices €1,290-1,405/tonne FD NWE, both of which were achieved in July 2008.
ICIS began reporting on liquid contract prices in March 2002 and flake contract prices in January 2000.
PA producers had initially targeted an increase beyond €70/tonne for March contract prices, and although a minority of players said they had achieved rises of up to €130/tonne, increases of €70/tonne were widely confirmed. This was because of difficulties in passing price rises beyond OX into downstream markets.
Nevertheless, PA supply is tight and demand increasing. Demand is tight because of difficulties in sourcing feedstock OX. OX producers are preferring to produce paraxylene (PX) and mixed xylenes (MX) which have better margins.
Several PA sources said the market would remain tight until at least May.
Flake availability is particularly low because of high buying interest in the Middle East. Typically the Middle East sources from China, but product there is tight and Middle Eastern players are increasingly turning to Europe to try and cover volumes. Logistical constraints are prohibitive to the export of liquid material.
Domestic demand in Europe is strengthening because of the approach of the peak season in the downstream contruction and automotive sectors. Further boosting consumption, buyers are trying to source as much volume as possible to ensure supply and in anticipation of further feedstock cost rises in April, which will in turn lead to PA price rises.
($1 = €0.76)
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