A South Korean paraxylene producer has settled long-term contracts for 2016 at a deeper discount of $2.50/mt for non-Asian contract price participants, 50 cents wider from 2015, a company source said Thursday.
Another producer’s sales contracts were agreed in principle at the same price level, and contracts were expected to be inked soon, a company source said.
Several Chinese purified terephthalic acid producers, who are PX end-users, confirmed the settlement.
Asian PX long-term contracts are typically settled on a formula based roughly on 50% Asian Contract Price settlement and 50% Platts’ CFR Taiwan/China assessments, according to market sources. In the months when there is no major ACP settlement, the contracts are typically based on spot prices, such as Platts CFR Taiwan/China benchmark.
There was a settlement in February, March and April. It was last settled at $795/mt CFR for April. The spot price was last assessed at $802.33/mt CFR Taiwan/China on Wednesday.
The first long-term contract settlement this year was announced in January between Chinese PTA producer Yisheng Petrochemical and South Korean PX producer SK Global Chemical at a discount of $2.50/mt, but for a longer period than usual, two years.
Negotiations for the one-year contracts for 2016 dragged on until April as producers were unwilling to agree to end-users’ request for a deeper discount as well as other terms.
With some South Korean producers now having settled contracts at minus $2.50/mt, others have said that they will follow suit.
