05 April 2013 09:55 [Source: ICIS news]
LONDON (ICIS)--European paraxylene (PX) players are unsure of how the April monthly contract will shape up following a severe price drop in Asia, sources said on Friday.
Two major PX producers in Asia settled their April Asian Contract Price (ACP) at $1,400/tonne (€1,078/tonne) CFR (cost & freight) Asia, down $285/tonne from February. There was no major settlement for March.
Spot values in the region had shown sustained losses towards the end of March amid poor macroeconomic conditions and weak demand from end use markets. Nevertheless, the settlement at $1,400/tonne – the very bottom of the market – caught many by surprise.
“$1,400/tonne was an emotional and dramatic drop,” said one European downstream source. “So the European contract price is a big question now.”
While European PX buyers had previously predicted a drop of anywhere between €50-80/tonne, several of them had now revised ideas closer to €100/tonne in line with the sharp drop seen on the ACP.
“A drop of €100/tonne seems probable when you calculate the Asian decrease,” said one downstream polyethylene terephthalate (PET) buyer.
However, spot levels in the region have since started to show signs of recovery, with prices back up around the $1,450/tonne FOB Korea mark.
One downstream player in Europe noted this, arguing that a triple-digit drop on the monthly contract price was “unrealistic”.
($1 = €0.77)
Additional reporting by Caroline Murray
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