LONDON (ICIS)--Players in the European orthoxylene (OX) market are braced for an increase in the monthly contract for December, sources said on Wednesday, amid steady-to-firm pricing in Asia and the US, as well as renewed buying interest from abroad.
Firmer pricing for feedstock mixed xylene (MX) in both the US and Europe are also adding to the general uptrend ahead of December.
The European November contract was settled at €1,005/tonne ($1,358/tonne) on a free delivered (FD) northwest Europe (NWE) basis, down €35/tonne from the previous month in line with global bearishness.
However, sources noted that firmer upstream and energy costs throughout November have seen price indications for OX strengthen. The European market has remained balanced-to-tight, and one supplier noted that there had been some interest in spot material from South America.
With no liquidity in the spot market, it remains difficult to gauge where prices should be. While there had been talk of spot deals done at around the contract price level, these were unconfirmed.
Other traders were looking at arbitrage opportunities into Asia, India and the US market, which would be workable with European material priced in the low $1,300s/tonne.
There has been talk of cargo being exported to Asia, as OX pricing in the region saw an upturn mid-November on the back of improved buying sentiment and lower inventories in the Chinese market.
Weaker demand for co-product paraxylene (PX) in Asia has also limited production output for OX, while phthalic anhydride (PA) plants are said to be running hard at present to take advantage of the current bullishness in the market.
Despite this bullishness into December, downstream PA activity in Europe is seasonally slow in line with year-end inventory management, and with next month’s offtake to be curtailed by the holiday season, this will limit any potential for price increases next month.
($1 = €0.74)