30 July 2012 13:56 [Source: ICIS news]
LONDON (ICIS)--An initial European August orthoxylene (OX) contract has been agreed at €1,090/tonne ($1,346/tonne), one producer and one buyer said on Monday, up by €45/tonne from the previous month’s settlement.
While demand is expected to quieten for August, a traditionally slow summer month, supply levels are balanced after a period of tightness which drove offers for spot material as high as $1,700/tonne earlier in the year.
“Nobody is at these levels anymore,” said one major OX consumer. “August is seasonally low, so a reduction for the CP [contract price] was expected.”
The tightness earlier this year had been driven by production outages and a lack of imports owing to slim arbitrage opportunities, and sources agree the fundamentals of the OX market paint a different picture altogether.
Plasticizer demand has been severely eroded by a weaker automotive sector this year, and OX demand from the construction industry has been curtailed ahead of August and the summer, with nobody producing now for winter activity.
However, with several planned turnarounds in the market on the horizon for September, one producer said that this would mitigate any downturn in pricing over the summer months.
The settlement was agreed on a free delivered (FD) northwest Europe (NWE) basis.
($1 = €0.81)
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