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 said.
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.
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 pressure.
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 spot PX.
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.
