Price and market trends: Europe PX players point to confused monthly settlement again

17 July 2014 18:13 Source:ICIS Chemical Business

Europe short of PX, with low isomerisation rates, a force majeure and plentiful exports chasing high prices in Asia and US

Europe paraxylene (PX) market participants on 8 July talked of a difficult monthly settlement for July, with global uncertainty on pricing and new start ups.

European settlements have been difficult in recent months as, since February, the Asian market has not been able to agree on a monthly contract price.

Historically, Europe looks to Asia for guidance, with the risk of substantial imports if the European price is set higher than Asian prices.

As a result, the European price has tended to be set towards the end of the month when Asian spot prices are more visible. Sources say this is unlikely to change this month.

“I haven’t even talked to customers yet. They are keeping their heads down,” said one PX seller.

The situation is exacerbated by the strong swings in pricing. Asian spot prices hit a nine-month high by the end of June and then fell by 8% in the first week of July.

“This month is very difficult. We will be watching developments. We saw Asian number falling down a lot in one week”, said a PX buyer.

With this level of uncertainty, arriving at a price for the month is seen as difficult. Sources last week were talking of initial indications of over €1,000/tonne.

One producer saw this as modest given Asian movement over June. However, considering movements over the past week, buyers see that target as too ambitious.

“Yesterday we thought a ­minimum of 1,050 [€/tonne] for July PX in Europe but after a few days drop, we think it’s too ­optimistic at 1,000,” said a second buyer.

“Generally speaking it’s very difficult to say a level, but I see 990-1,000 [€/tonne], with 1,000 as a psychological barrier,” said the first buyer.

Europe has been short of PX, with low isomerisation rates, a force majeure and plentiful exports chasing high prices in Asia and the US.

“The market is fairly long. I think the fact that producers ship out of Europe tells you the market is long. Exports are keeping the market balanced,” said the buyer.

However, how long the tightness in Europe will persist is open to question. In particular, new start-ups in South-East Asia during July should increase global capacities and put further uncertainty on global pricing.

“There is a few million tonnes expected in the summer. It will impact the market for sure”, said the buyer.

Caroline Murray contributed to this article

By Rhian O'Connor