Europe OX steady ahead of March contract talks

24 February 2014 15:37 Source:ICIS News

LONDON (ICIS)--The European orthoxylene (OX) market remains relatively calm and steady ahead of March contract discussions, sources said on Monday, with balanced domestic availability counteracted by weak sentiment in Asia.

Despite the closure of Arkema’s downstream phthalic anhydride (PA) plant in Chauny. France earlier this year, sources in the market report continued ample availability so far.

Nevertheless, with demand expected to see a seasonal lift beginning in March with renewed construction activity, players are cautiously optimistic that this will have a positive impact on OX.

Bearish macroeconomic signals and a weaker Asian market are counteracting this view somewhat. Prices for OX in the region have been on a steady downtrend since the start of February in line with weaker sentiment both upstream and in the PA sector.

However, with pressure on OX production margins leading to some producers in Asia curtailing operating rates and a maintenance closure in India scheduled for next month, this could help prices in the region rebound over the course of March.

European PA traditionally sees an uplift in demand from March onwards, as offtake from the construction sector improves with the milder weather conditions.

There are mixed opinions in the PA market as to whether activity will pick up next month, and some players feel that the Chauny closure will gradually support higher pricing due to a rebalancing of the market.

The PA plant at Chauny had an annual PA nameplate capacity of 90,000 tonnes, according to ICIS data.

By Truong Mellor