14 December 2012 10:07 [Source: ICB]
An initial December toluene contract was agreed at $1,297/tonne (€999/tonne), down $28-38/tonne from last month's settlements, one buyer confirms.
Spot pricing has started to ease as the year-end approaches and players begin inventory management. While demand has been seasonally weak, there have been concerns about the availability of toluene di-isocyanate (TDI) grade material, which have helped support selling indications throughout November.
Buyers in the spot market have moved below the $1,300/tonne level, while sellers remain above it, with one trader pegging offers as high as $1,340/tonne. However, continued illiquidity in Europe has left it hard to understand where the market should be valued.
The contract was settled on a free on board (FOB) northwest Europe (NWE) basis, and further confirmation from other players is pending.
Meanwhile, the European December orthoxylene (OX) contract was confirmed at €1,093/tonne ($1,419/tonne), a reduction of €27/tonne from the previous month, as the initial settlement received further support from players.
A decrease had been widely expected, as demand from key end-use markets softens ahead of the holiday period.
Players in the downstream European phthalic anhydride (PA) market have struggled with margin erosion amid slower than usual demand from the coatings and construction sectors throughout 2012.
Nevertheless, one producer said there had been "robust debate" during negotiations, as reasonably balanced supply levels meant sellers looked to mitigate any downward movement.
While the market has struggled in 2012 with record high pricing stemming from supply limitations and production outages, with spot levels moving over $1,700/tonne FOB (free on board) Rotterdam at one point, softer demand and lower mixed xylenes (MX) values have pulled numbers back down in the fourth quarter.
Despite the decrease in euro terms, the December contract number actually represents a $2/tonne increase from November, owing to the weaker US dollar.
The settlement was agreed on a free delivered (FD) northwest Europe (NWE) basis.
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