NEW YORK (ICIS)--Rumblings of a February contract settlement for US paraxylene (PX) have been heard in the market, with a move downward by 4.25 cents/lb ($94/tonne) from January looking possible, market sources said on Friday.
The unconfirmed settlement was heard at 65.5 cents/lb delivered (DEL), down from the January contract settlement of 69.75 cents/lb (DEL).
If fully settled at a February price of 65.5 cents/lb DEL, it would bring US PX down by 13% from September, as the price has been declining since then.
Some sources said that drastic drops in Asia PX spot prices spurred the downtrend in February. In the absence of price direction from the PX Asian Contract Price (ACP), which failed to settle in February, market players took their cue from the spot market.
The US PX monthly contract typically follows trends in the PX ACP.
In addition to falling spot price trends in Asia, US market participants have been monitoring the movement of raw materials, which they expect to settle down by over 2 cents/lb in February.
Compounding those downward pressures are low values in US mixed xylene (MX) and systemic oversupply of the PX market, a market source said.
Initially, US participants were expecting the February US PX contract price to drop by 1-2 cents/lb from January, but expectations have been revised since then. US PX is now expected to drop by 3-5 cents/lb, sources said.
A lower PX contract price will pull down the downstream purified terephthalic acid (PTA) February contract price, which is formula-dependent on PX, and subsequently, US polyethylene terephthalate (PET) prices.
PX is primarily used to make PTA, an intermediate chemical used to manufacture PET. A major outlet for PET is in the production of plastic bottles for beverages. PET, as polyester, is used in textiles.
Major US PX producers include BP, ExxonMobil, Chevron Phillips Chemical (CP Chem) and Flint Hills Resources.