Europe OX sentiment weaker ahead of Feb contract talks

LONDON (ICIS)–European orthoxylene (OX) players are braced for potential downward movement on the monthly contract for February, sources said on Monday, in line with weaker domestic fundamentals and some price erosion in Asia.

With the Asian market currently valued around the $1,350/tonne FOB (free on board) level, this has kept downward pressure on European spot numbers towards the end of January in order to keep any export business viable.

One trader also noted that freight prices out of the ARA region are currently valued as high as $140/tonne due to limited availability for January and February. Downstream phthalic anhydride (PA) demand in Europe remains seasonally lacklustre so far in 2014, with the market well supplied.

Asian OX prices have seen significant downward movement in January because of lower feedstock costs and high inventories in the key Chinese market amid an uncertain outlook on regional PA demand.

The Europe OX January contract was agreed at €1,005/tonne on free delivered (FD) northwest Europe (NWE) basis, a rollover from the previous month.