Corrected: Europe CX Q2 delta discussions to start soon

21 March 2013 16:30  [Source: ICIS news]

Correction: In the ICIS story headlined “Europe CX Q2 delta discussions to start soon” dated 21 March 2013, please read in the third paragraph … The European first-quarter delta contract was agreed at €143/tonne, a rollover from the fourth quarter of 2012 … instead of … was agreed at €140/tonne, a reduction of €5/tonne … A corrected story follows.

LONDON (ICIS)--European cyclohexane (CX) second-quarter delta contract discussions are due to get underway in the coming week, however, so far no price ideas have been exchanged between producers and consumers, sources said on Thursday.

One major producer said: “Nobody has started negotiations, but I can’t take another drop because availability is tight and we expect demand to be strong. Everybody is moaning about low margins but we are running flat out.”

The European first-quarter delta contract was agreed at €143/tonne ($186/tonne), a rollover from the fourth quarter of 2012.

A second CX producer said it was “gearing up” for discussions and hoped to agree the contract delta price by the end of March.

“Next week will have a settlement,” the producer said, but refused to comment on its price target. The producer described the market as tight, with no spot material available.

“Of course there have been some supply constraints due to turnarounds but in my view quarter two will see supply more healthy but demand will balance the market out,” the producer added.

On the buying side, CX consumers confirmed negotiations would start next week, but said they did not expect the second-quarter delta to increase despite the market coming from a tight position.

“It's too early to mention any numbers … the market is not long and if you want additional volumes it is extremely difficult - this would suggest a tight market and we are running at good rates,” the buyer added.

A second buyer said: “There’s nothing much to say yet in relation to the delta and the market is slightly tight, but there are no problems getting molecules. [Even with overall availability tight] we can get our product on time.”

“It’s too premature and I prefer to talk to my [contract] partners first. I understand they would like to get something upwards, but energy is down. We won’t accept a big price for sure and I don’t want to be squeezed,” the buyer added.

“Even if it’s a little increase it will still be painful,” the buyer said.

When the first-quarter CX delta settled, Brent crude was trading at $112.53/bbl. On Thursday afternoon, Brent crude was trading around $108/bbl.

Benzene spot prices were also higher when the first quarter CX delta settled in December 2012. At the time, spot benzene was valued at $1,450-1,470/tonne CIF (cost and freight) ARA (Amsterdam-Rotterdam-Antwerp).

Currently spot benzene is around $1,230-1,270/tonne CIF ARA.

Cyclohexane is used as a raw material for the production of nylon intermediates caprolactam and adipic acid and is produced by reacting benzene and hydrogen.

($1= €0.77)

By: Julia Meehan
+44 20 8652 3214

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