Europe April PTA falls €29/tonne, follows weakening upstream PX

25 May 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--Prices in Europe for April purified terephthalic acid (PTA) decreased by about €29/tonne ($36/tonne) on Friday, following raw material paraxylene (PX) and amid length in the PTA market.

A fall of €43/tonne in the price of PX from March to April resulted in the fall of €29/tonne for PTA, according to ICIS.

This brings PTA prices down to €978-1,003/tonne FD (free delivered) NWE (northwest Europe) when calculated against the previous month's ICIS range.

However, some players argue that conversion costs of €145/tonne are in play, which introduce PTA levels of €966/tonne. Similarly, very small customers may have costs of €200/tonne and above.

"It's back to what you believe the spread over PX is," a producer said.

Conversion fees vary according to when they were set and in some cases, whether they refer to contract or spot business, and anything from €145-180/tonne is reported.

Another €15/tonne decrease in the price of May PX puts pressure on PTA to go down by a further €10/tonne this month. PX discussions are just starting in Asia and initial nominations show a rollover and a drop of $20/tonne. However, observers say the end result is more likely going to be $100/tonne down from May to June.

"The market is long," a producer said, echoing statements made by buyers and sellers over the past few weeks.

New capacity in the form of Portugal's ARTLANT PTA in Sines, a 700,000 tonne/year PTA unit that began producing in March, is operational but not running at full rates, according to other market sources. There are no comments from ARTLANT PTA directly. All producers are running, according to one of them.

Demand for downstream polyethylene terephthalate (PET) has been poor and customers are poised for further decreases while producers try to hold onto margins. The depressed mood in the market has deepened as crude oil softens and demand in China falters.

($1 = €0.80)

Follow Caroline Murray on Twitter

By: Caroline Murray
44208 652 3214

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