An initial Northwest European paraxylene contract price for April has been fully confirmed at Eur900/mt ($1,244/mt) FD Northwest Europe, a rollover from the March contract price, a producer involved in the negotiations confirmed Monday.
The settlement was reported settled by Total Petrochemicals, with sources reporting Shell Chemicals also settled, as producers. Cepsa Quimica and Oxynova confirmed settling as consumers.
The settlement was the second contract to be settled in April. It followed an agreement done at Eur925/mt FD NWE on April 15, an increase of Eur25/mt from the March contract.
This first contract price, however, failed to gain traction in the market, and some producers, as well as other consumers, sought a rollover as a reflection of derivative-market fundamentals, which were characterized by many as weak.
Downward pressure on the European PX market in recent weeks has been caused by a lack of demand from the Amsterdam-Rotterdam-Antwerp fiber/polyester market and poor arbitrage economics to other regions, sources said.
In addition, production margins have been squeezed by strong demand from the gasoline blending pool, which has attracted feedstock xylenes and toluene.
"The economics are horrible for any producer for PX at those kinds of prices. Other producers have sophisticated models from all (production) routes (but) they are punishing economics for everyone. The downstream is weak (and gasoline is strong)," a producer said.
The same source pointed to the prospect of capacity closures globally as a measure that producers would have to resort to in order to balance both PX and derivative PTA supply.
"Which capacity shuts down first as people cannot afford negative costs? In Asia some of the [PX] capacities are starting to go down so you had PX prices recovering but now some of the PTA plants starting to shutdown so you had PX prices falling again," the producer said.
Asian paraxylene prices were assessed at $1,168/mt FOB Korea and $1,192/mt CFR Taiwan/China Monday, down $14.50/mt from Friday.
Market sentiment remained bearish amid falling purified terephthalic acid prices and high PX inventories.
