Northeast Asia’s paraxylene term contracts were concluded at discounts of $2-4/mt on a CFR Taiwan/China basis to their respective price formulas for term year starting January 2015, flipping from premium levels last year on rising supply as new capacities come onstream, market sources said this week.
Term discounts for PX Asian Contract Price participating buyers were set at $4/mt on a CFR basis, while discounts for non-ACP buyers from countries such as China and Taiwan were agreed at $2/mt, CFR.
In comparison, cash differentials for term year 2014 ranged from parity to a premium of $2/mt.
Regional term sellers include ACP sellers, namely Japan’s JX Nippon Oil and Energy, and Idemitsu Kosan, ExxonMobil, South Korea’s S-Oil and SK Global Chemical.
On the buy side, end-users include ACP buyers BP, Taiwan’s Capco, Oriental Petrochemical (Taiwan) Corp., Japan’s Mitsui Chemicals and Mitsubishi Chemical, and China’s Yisheng Petrochemical.
Price formulas typically take the average of ACP and spot PX assessments such as the Platts CFR Taiwan/China marker.
The ACP for February was concluded at $710/mt CFR Asia Friday in a major settlement, the first such settlement since October last year. In 2014, the ACP only settled twice.
In the event of a non-settlement month, price formulas will be wholly based on spot price assessments.
Elsewhere, term price differentials for buyers in Southeast Asia such as Indonesia and Thailand have also plummeted to discounts of around $5/mt on a CFR Southeast Asia basis, from parity to a premium of $2/mt in 2014.
The fall in term differentials this year was largely attributed to new PX supply coming onstream across Asia and the Middle East.
Last year, around 7 million mt/year of PX capacity started up in Asia and the Middle East.
In 2015, nearly 4 million mt/year of new PX capacity will come into operations.
– Platts.com
