Europe March PA contract prices firm on higher costs

15 March 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European phthalic anhydride contract prices have firmed by €15/tonne ($19/tonne) in March, in line with the full orthoxylene (OX) feedstock price rise, market players said on Friday.

This is because the majority of PA contracts are agreed on a formula basis, linked to the OX feedstock move.  The European OX contract price settled in March at €1,148/tonne FD (free delivered) NWE (northwest Europe), up by €15/tonne from February.

PA contract price ranges in March for liquid and flake product have moved up to €1,355-1,405/tonne FD NWE, according to ICIS.

PA demand has shown a few early signs of some seasonal improvement in March in the downstream resin sector, compared with earlier in the first quarter.

The second quarter is traditionally a good period from a seasonal perspective, but players said it remains to be seen to what extent the seasonal pick-up will materialise, depending on how the economy pans out.

In central and southern Europe, however, offtake remains slower when compared with northwest Europ as southern and eastern Europe have been most affected by the poor economic conditions.

PA liquid availability was described as largely balanced, although as the week progressed there were a few reports that the market was tightening on the back of production and logistical constraints for one main supplier.

On top of production problems, other suppliers have run their PA units at reduced rates in some cases because of demand uncertainty and the need to keep the market in balance, as demand has not been strong for seasonal and economic reasons.

PA flake supply is generally good in northwest Europe, but not as long as at the end of 2012 because of fewer imports in the market.

One trader also suggested that the liquid PA supply constraints for one supplier has also had a knock-on effect on PA flake supply to some extent, because where players have the flexibility to purchase both liquid and solid grades, they are opting for PA flake. where PA liquid volumes are not available.

A few other players, however, maintain that supply in eastern Europe is plentiful because of competition from import volumes and subdued demand. 

($1 = €0.77)

By: Heidi Finch
+44 20 8652 3214

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