European spot paraxylene market in price stalemate between sellers, traders
London (Platts)--15Nov2012/1133 am EST/1633 GMT
The spot market for paraxylene in Europe is currently paralyzed by a
stalemate between sellers and traders, with final consumers out of the
picture altogether, sources said.
There have been no European spot trades for three to four weeks, and the
notional bid offer spread is $1,440-$1,500/mt FOB ARA, market participants
End consumers in Europe are showing no desire for spot product, and
sources said that many are cutting their contractual volumes too.
The lack of demand stems from weakness in the downstream markets for
purified terephthalic acid and polyethylene terephthalate.
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Producers of both products down the chain from PX are squeezed on
margins because of relatively expensive PX combined with falling demand for
the derivative products, with cheap imports of PET adding to the downward
The margin squeeze has been amplified by the higher European contract
price for paraxylene, which settled at Eur1,210/mt ($1,548/mt) FD NWE late
last week, up Eur20 from October.
"From a PET point of view, even Eur20 up is too much, but probably as
good as it could have been," said one PX buyer.
As most PET producers have cut production rates, their requirements for
the feedstocks PTA and monoethylene glycol have fallen.
Sources said that some PTA producers have also cut their production
rates, leading to a lower requirement for PX.
"The markets are very weak and we have no spot requirements," said a PX
consumer, expressing a sentiment that was echoed by other buyers.
Producers, for their part, have not expressed a strong desire to shift
product on the spot market.
When pressed, they have given notional offers of around $1,500/mt,
arguing that they are not willing to sell much below the contract price.
Sellers argue that there is not much product available for spot business
and they are in no rush to sell.
"Producers have not produced a lot because they knew demand was weak. I
don't think there is much PX in the tanks, and if somebody needed much spot
PX it would be hard to find," said one seller.
With end consumers out of the game, the only source of spot demand in
Europe comes from traders wishing to ship material to Asia for profit.
With Asian prices assessed at $1,567.50/mt CFR Taiwan/China on Thursday,
traders said they would only be willing to pay about $1,440/mt FOB ARA for
Currently, Turkish producer Petkim has a 5,000 mt tender out. The
producer was originally asking for prices close to $1,500/mt FOB ARA, sources
said. But a source at the seller said Thursday that the tender is likely to
go at around $1,450/mt FOB ARA.
--Brendan Daly, firstname.lastname@example.org
--Edited by Jonathan Dart, email@example.com