18 May 2012 23:59 [Source: ICIS news]
LONDON (ICIS)--European phthalic anhydride (PA) May contracts have settled at a rollover following a similar move in feedstock orthoxylene (OX).
Producers had hoped to increase PA prices in May in order to restore margins against OX. In late April, PA supply had been tight because of difficulties in sourcing OX. Nevertheless, weakening downstream demand has rebalanced the market, preventing PA producers from increasing prices in May.
Low margins stopped PA prices from falling for May contracts, which finalised at €1,475-1,505/tonne ($1,867-1,905) FD (free delivered) NWE (northwest Europe) for liquid and €1,410-1,480/tonne FD NWE for flake.
PA players have moved to the sidelines of the market because of uncertainty over the future evolution of prices. Upstream costs are volatile, and buyers and sellers are uncertain where feedstock costs will move in June.
Coupled with this, growing fears over the seriousness of the eurozone crisis and macroeconomic deterioration have meant that players are focused on lowering risk and, therefore, unwilling to hold stock.
Adding to the uncertainty, a strengthening US dollar has reduced exports of flake PA to the Middle East and Asia, as European material is becoming less competitive.
PA trading activity has been further limited this week by public holidays in parts of Europe.
($1 = €0.79)
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