The paraxylene Asian Contract Price for January is in limbo with only one of four ACP-based producers agreeing to settle at $1,445/mt CFR, sources close to the negotiation process said Thursday.
US-headquartered ExxonMobil settled with three end-users Wednesday at $1,445/mt CFR, making it the initial settlement for January. Under the ACP system, at least two producers and two buyers have to concur on the same price for it to be regarded as the ACP for the month.
On Wednesday, Japanese producers JX Nippon Oil & Energy cut its proposal from $1,510/mt CFR to $1,480/mt CFR, while Idemitsu Kosan reduced its nomination from $1,550/mt CFR to $1,470/mt CFR. But both companies did not agree to $1,445/mt and have stopped negotiations as Japan is now closed for business until January 4.
South Korea's S-Oil, who only joined the ACP negotiation process in January 2011, also did not agree to the $1,445/mt CFR settlement.
Part of the difficulty in reaching a settlement was the wide disparity in profit and loss for PX producers and purified terephthalic acid makers.
According to Platts data over December 1-29, the spread between PX and its feedstock naphtha averaged $549.20/mt, more than double the $230/mt needed to breakeven. PTA producers, on the other hand, have been incurring losses since October. Over the same period, the spread between PTA and PX averaged at minus $16.33/mt.
With more than 10 million mt/year of new PTA capacity set to come on stream in 2012 amid tight PX supply, PTA producers are expecting tough challenges ahead, with feedstock cost at the top of their agendas.
"Selling PTA is not a problem," said a South Korean PTA maker. "The main problem is the spread against PX," he added.
