23 April 2013 09:47 [Source: ICIS news]
LONDON (ICIS)--European paraxylene (PX) activity remains stifled amid poor downstream demand, sources said on Tuesday, although the slump in raw material and energy costs has led to healthy production margins for suppliers.
PX numbers in Europe saw some downward movement in line with the sharp drops seen in Asia earlier this month. Spot numbers in the region have proven erratic over April following the settlement done at $1,400/tonne (€1,078/tonne) CFR (cost and freight) Asia.
This was felt in Europe, which takes its cues from Asian PX price developments, although the volatility has been less pronounced in a market largely characterised by illiquidity.
Domestic demand has been quiet throughout 2013 because of poor end-use conditions, but this has been counteracted by balanced availability outside of contractual volumes.
“There was some hype among traders talking of numbers above the April CP [contract price], but with no export opportunities it makes no sense to pay a premium,” one source said.
The April European PX settlement was confirmed at €1,120/tonne on a free delivered (FD) northwest Europe (NWE) basis, a decrease of €130/tonne from the previous month.
Sellers have been resistant to lowering offers below contract price levels, arguing that there is no incentive to do so amid limited demand for spot volumes, although the upcoming summer months could see a shift in this regard.
“PTA demand could see some improvement as the summer approaches, with more offtake for PET [polyethylene terephthalate] production,” said one buyer. “But downstream producers will need to look at costs and margins carefully.”
Moreover, with prices for feedstock mixed xylenes [MX] slipping in line with lower energy numbers this month, several players have noted that PX prices could come down while sellers still retain a healthy margin.
“MX prices are around $1,150/tonne right now,” one buyer said. “So you could see PX fall about $100/tonne below the April CP level and still remain profitable for sellers.”
($1 = €0.77)
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