19 March 2013 11:33 [Source: ICIS news]
LONDON (ICIS)--Sentiment in the European orthoxylene (OX) market remains good as the second quarter approaches, sources said on Tuesday, despite the the construction sector underperforming so far this year and bearishness in the upstream oil and energy markets.
“We are seeing customers taking all of their contractual volumes,” one major producer said. “In some cases, they are looking for additional material.”
This upturn has been reflected in the last two monthly contract settlements, which have seen increases of €40/tonne ($52/tonne) and €15/tonne.
One argument for the current upturn in activity is that many end-users had previously adopted a cautious outlook for 2013. As a result, sales targets for this year have so far been reached, although the market is still far from bullish.
Supply levels are balanced in Europe, with talk of some tightening in the coming months as the peak downstream season unfolds and several turnarounds get under way.
The market was slow to pick up following the Christmas holiday period, with some activity driven by inventory restocking but no significant upturn in demand.
Downstream, the phthalic anhydride (PA) market has seen upward movement on pricing as well, partly caused by higher OX numbers but also due to logistical constraints for at least one supplier, and better seasonal offtake.
The euro's weakness against the US dollar has now made PA imports into Europe unworkable, which is also helping to support domestic producers as demand starts to pick up.
The major outlet for PA, which accounts for just over half of production, is the manufacture of phthalate plasticisers. The main product is dioctyl phthalate (DOP), which is used as a plasticiser in polyvinyl chloride (PVC).
Despite a generally positive sentiment, numerous OX players said that the key downstream construction sector has so far been underperforming, most likely as a result of the inclement weather conditions in Europe so far this year.
“That is the one area where we have not been seeing any upturn,” one seller conceded, adding that it nonetheless expects some improvement in the second quarter of 2013.
($1 = €0.77)
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