Bearishness in Asia results in European buyers becoming more willing to push for deeper reductions in March
The absence of any clear paraxylene (PX) contract settlement in Asia for March is likely to delay any agreement in the European market for the upcoming month, sources said on 24 February.
With the initial January contract in Europe compensated for this month with a sharp €92/tonne decrease, several players last week were looking at a relatively steady movement from February into March.
One supplier and another downstream source estimated a March settlement around €1,000/tonne.
The February European contract was agreed at €975/tonne on a FD (free delivered) NWE (northwest Europe) basis.
However, with continued weakness throughout the polyester chain in Asia pulling PX spot numbers well below $1,300/tonne, this will see buyers push for further reductions in Europe to keep the market in line with global pricing.
“PX could go any direction,” said one source in the PET market. “The exchange rate and the sudden drop in Asia could give us the view that PX can go further... its pure speculation.”
While the Asian spot market did see a slight recovery in mid-to-late February amid short covering, continued weak downstream demand and economic uncertainty are weighing on overall sentiment.
Production cutbacks at downstream purified terephthalic acid (PTA) facilities in the region are also likely to reduce interest in PX.
Many players in Europe are braced for difficulties with monthly contract negotiations, with downstream closures and rationalisation in Europe.