The Asia Contract Price for paraxylene is likely to reach a settlement for June, after no conclusion for May, as a firmer purified terephthalic acid production margin has narrowed the gap between buyers and sellers, sources close to the negotiations said Tuesday.
"The PTA margin is improving and operating rates of Chinese PTA producers are increasing," one of the sources in China said, adding that he expected negotiations to be smooth for the June PX ACP.
There are four PX ACP sellers in Asia -- Japan's Idemitsu Kosan and JX Nippon Oil and Energy, ExxonMobil and S-Oil. S-Oil nominated its June PX ACP at $1,490/mt CFR, Idemitsu Kosan at $1,500/mt CFR, JX at $1,470/mt CFR, Platts reported Monday.
ExxonMobil has not revealed its nomination yet, but sources said the company unofficially told customers that its nomination value would be $1,550/mt CFR.
There are six ACP buyers: BP, Taiwan's Capco and Oriental Petrochemical (Taiwan) Corp., Japan's Mitsui Chemicals and Mitsubishi Chemical, and China's Yisheng Petrochemical. According to sources, counter bids by buyers for the June PX ACP are expected to range from $1,300/mt to 1,350/mt CFR .
For May, buyers and sellers did not reach a settlement for the PX ACP. So far in 2013, buyers and sellers were not able to settle the monthly PX ACP twice -- for March and May -- as negative PTA margins slashed PTA producers' demand for PX feedstock.
"Buyers are willing to accept around $1,400/mt CFR for the June PX ACP," said the source in China.
Based on Platts' data, the PTA margin in Asia was calculated at minus $21.03/mt Monday -- the highest level since July 3, 2012. Asian PX prices have been on a downtrend amid ample supply in the region, which in turn has boosted the PTA margin.
On Monday, the CFR Taiwan/China PX price was assessed at $1,395.50/mt, the lowest level since August 1, 2012, while the CFR China PTA price was assessed at $1,050/mt, stable in May so far.
Despite weak PX prices, the spread between PX and feedstock naphtha was holding steady. Based on Platts' data, the PX-naphtha spread was calculated at $538.13/mt Monday, higher than the breakeven point of $250/mt.
"Both PX and PTA margins are good. So both buyers and sellers are willing to settle this time," said one of the sources.
