24 May 2013 09:21 [Source: ICB]
The May European paraxylene (PX) contract has been fully confirmed at €1,120/tonne ($1,455/tonne), a rollover from the previous month, as the initial settlement received further support from players on 13 May.
As there was no clear contract price seen this month in the Asian market, European players looked at the average spot price developments to reach a settlement for May.
Asian PX suppliers had revised earlier nominations down to around $1,470/tonne CFR (cost and freight) Asia, but the majority of end-users were targeting a rollover for April at $1,400/tonne.
SPOT STABLE IN ASIA
One European supplier noted that the volatility of the Asian market in March and April appears to have settled somewhat, with prices now contained within a narrower range of $1,400-1,450/tonne FOB (free on board) Korea.
"May is a rollover," a European seller said. "Spot is fairly stable at $1,425/tonne in Asia.
"I think the expectation is that [Asian prices] would go at $1,450/tonne, but by the time spot settled in that range, a rollover would be the most pragmatic thing to do."
The seller said it had spoken to at least four consumers. "Everyone was just agreeing. It was a very uncontroversial settlement," it added.
A buyer said: "So far, spot development and the exchange rate are playing a role.
"We can argue €10/tonne either way, but without a firm basis a rollover is the best outcome."
The market has recently been prone to volatility on the back of crude pricing and a bearish downstream purified terephthalic acid (PTA) sector.
PX offtake could improve if seasonal demand picks up, although many remain wary of historical trends given the wider macroeconomic climate.
The European contract was agreed on a free delivered (FD) northwest Europe (NWE) basis.
PX is the largest volume isomer of the mixed xylenes.
Around 98% of PX is consumed in the polyester chain, mainly in the production of fibre, film and polyethylene terephthalate (PET) bottle resins, via one of two intermediates: PTA or dimethyl terephthalate (DMT).
Additional contribution by Truong Mellor
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