04 April 2013 11:08 [Source: ICIS news]
LONDON (ICIS)--The April European orthoxylene (OX) contract has been confirmed at €1,128/tonne ($1,446/tonne), down €20/tonne from the previous month, as the initial settlement received further support from players on Thursday.
March has seen some signs of improvement, with availability balanced and demand looking healthy ahead of the second quarter. However, weaker global pricing weighed down on the European market.
Asian OX prices have steadily lost ground for the last five weeks on bearish upstream conditions, poor end-user demand and a steep drop in co-product paraxylene (PX), while players in the US market are braced for a decrease on the monthly contract in April owing to softer fundamentals.
There are also lingering concerns surrounding the construction industry in Europe, with poor demand so far this year no doubt partially driven by the inclement weather.
Some players do not expect offtake from construction to show any meaningful signs of recovery in 2013, with the wider macroeconomic instability also keeping potential activity limited as players exercise caution – all of which are likely to impede any serious market recovery for OX.
The settlement was agreed on a FD (free delivered) NWE (northwest Europe) basis.
Meanwhile, there is no clear news yet regarding the European PX settlement this month, following the sharp and unexpected decrease of $285/tonne in Asia, where an April settlement was reached at $1,400/tonne CFR (cost & freight) Asia.
Several downstream sources last week had predicted the European PX number to settle down by €50-80/tonne, but the magnitude of the losses in Asia has seen them revise ideas to around €100/tonne.
“PX is a very big worry,” said one downstream producer. “[The Asian settlement at] $1,400/tonne was an emotional and dramatic drop – not normal. So the European contract price is a big question now.”
($1 = €0.78)
Additional reporting by Caroline Murray
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