China’s Jiangsu Shenghong Chemical Fiber Co settled its 2017 long-term contracts with major Japanese and South Korean producers for buying paraxylene, keeping its pricing terms unchanged from the 2016 contracts, a company source said Monday.
“There is no point fighting over 50 cents for six months,” the source said, adding that the settlement would “minimize uncertainty in the market.”
Several long-term contracts for 2016 were not settled until April-May this year, sources said.
The common settlement terms for 2016 were a $2.50/mt discount for buyers outside the Asian Contract Price negotiations, and a discount of $4/mt for buyers taking part in the ACP. The discount is typically applied to a 50/50 combination of S&P Global Platts assessed spot prices on a CFR Taiwan/China basis and the ACP settlement for the respective month.
Shenghong is also set to join the ACP negotiations as a permanent participant from January 2017, having gained acceptance from major producers in the ACP, Platts reported earlier.
Shenghong’s PTA plant at Lianyungang has the capacity to produce 1.5 million mt/year of PTA.
Earlier, some long-term contracts for 2016 and 2017 were settled on a two-year basis between a major Chinese PTA producer and two major South Korean PX producers at a discount of $2.50/mt, meaning that a rollover in price for 2017 was expected, market sources have pointed out.
