There has been no full settlement for the July Asian Contract Price for paraxylene as two of the four sellers were not able to settle at the same price with at least two buyers, sources close to the negotiations said Tuesday.
This is the first time since the January PX ACP that no full settlement has been reached.
There are four ACP sellers in Asia -- ExxonMobil, Japan's JX Nippon Oil and Energy and Idemitsu Kosan, and South Korea's S-Oil -- and six ACP buyers -- BP, Taiwan's Capco and Oriental Petrochemical (Taiwan) Corp., Japan's Mitsui Chemicals and Mitsubishi Chemical, and China's Yisheng Petrochemicals.
For July, ExxonMobil, Idemitsu and JX nominated their PX ACPs at $1,300/mt CFR and S-Oil at $1,330/mt. This was lower than the June settlement of $1,355/mt CFR.
Idemitsu settled with four end-users at $1,160/mt CFR on June 29, while ExxonMobil settled with Mitsubishi Chemical at $1,275/mt CFR on July 13. JX and S-Oil decided not to settle the ACP for July.
Two sellers and two buyers have to agree at the same price for a full ACP settlement.
Typically, the ACP negotiations are concluded on the last business day of previous month, which in this case would have been June 29. But the negotiations for July were extended as buyers and sellers were far apart.
When Idemitsu Kosan settled the ACP at $1,160/mt CFR on June 29, $195/mt lower than the June settlement, JX decided not to settle. ExxonMobil and S-Oil viewed Idemitsu's settlement as too low, amid a strengthening PX market then, and extended their discussions, Platts reported earlier.
According to Platts data, the CFR Taiwan/China PX price benchmark averaged $1,248.93/mt in June, $88.93/mt higher than Idemitsu's July ACP settlement of $1,160/mt.
Late on June 29, ExxonMobil reduced its July ACP nomination by $100/mt to $1,200/mt CFR. In the following week, however, ExxonMobil turned reluctant to maintain its $1,200/mt CFR nomination due to the sharp price rise in the spot PX market. During the first week of July, the CFR Taiwan/China spot PX price benchmark rose $62/mt to close at $1,337.5/mt on July 6.
The PX spot price continued rising in the second week of July -- closing at a 2 1/1 month high of $1,403.50/mt CFR on July 13 -- and ExxonMobil's $1,200/mt CFR nomination was no longer valid.
"Considering the sharp price increase in the spot PX market, it was impossible for ExxonMobil to follow Idemitsu's price or to settle at $1,200/mt CFR," a source close to the negotiations said Monday.
Consequently, ExxonMobil settled at $1,275/mt CFR with Mitsubishi Chemical last Friday. But other ACP buyers were reluctant to accept ExxonMobil's price as they had previously settled with Idemitsu at $1,160/mt CFR.
