Corrected: Europe October PA contract prices roll over on costs

12 October 2012 23:59  [Source: ICIS news]

Correction: In the ICIS story headlined "Europe October PA contract prices roll over on costs" dated 12 october 2012, please read in the third paragraph ...PA contract ranges in October remain at €1,435-1,465/tonne ($1,864-1,903/tonne)... instead of ...PA contract ranges in October remain at €1,425-1,465/tonne ($1,851-1,903/tonne)... A corrected story follows. 

LONDON (ICIS)--European phthalic anhydride (PA) contract prices have been agreed stable in October, following the rollover in orthoxylene (OX) feedstock costs, said market players on Friday.

This settlement information is in line with the majority of PA contracts being formula related.

To reflect the stable price trend, the PA contract ranges in October remain at €1,435-1,465/tonne ($1,864-1,903/tonne) FD (free delivered) NWE (northwest Europe) for liquid product and €1,385-1,455/tonne FD NWE for flake product.

Numbers below the range were also heard in October in a few cases, but there was insufficient market confirmation to substantiate this as a general market level on a gross basis.

PA demand for coatings and resins in the downstream construction and automotive sectors remains subdued, according to several sources, which they attribute to soft macroeconomic conditions and low seasonality in the fourth quarter.

A few producers, however, said their contractual demand remains solid and they have not seen any slowdown. One of the manufacturers said it was difficult to pinpoint if this was more related to recent production problems rather than underlying demand.

The PA liquid market is largely balanced, as a spate of production constraints, which have mainly affected liquid, are being offset by lower demand.

PA flake is seen to be more available than for liquid, because of talk of more imports ex-Russia and less demand for flake than for liquid.

Some sources said that PA supply is likely to improve over the next few weeks, following the resolution of some production problems and the expected seasonal and economic-related slowdown in demand over the fourth quarter. However, one producer expected PA output in Europe would generally be aligned to lower demand over the next few months.

A few sources suggest that some pockets of tightness in the upstream OX market could also limit PA production, although this has not been confirmed. A few manufacturers said they had sourced sufficient OX feedstock to run PA production at normal rates.

Buying sources said they had not experienced any availability problems and considered the market to be balanced-to-long.

In production news, Italy-based producer Polynt has lifted the force majeure on its phthalic anhydride (PA) supplies in Europe, as confirmed by a company source on Thursday. The force majeure on its PA supplies was removed on 8 October, but confirmation was not received until now.

The lifting of the supply restrictions follows its recent return to normal PA operations. Polynt had previously declared force majeure on its PA supplies in Europe in mid-June on the back of shortages of feedstock OX.

Polynt has the capacity to produce 80,000 tonnes/year of PA from its plant in Bergamo, Italy, and 30,000 tonnes/year of PA from its plant in San Giovanni Valdarno, according to the ICIS.

A few other plants in northwest Europe had experienced some technical production hiccups and maintenance work over recent weeks, although at least one the plants has now resumed normal operations.

($1 = €0.77)

By: Heidi Finch
+44 20 8652 3214

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