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Asian phthalic anhydride producers margins firmed by USD70-100/tonne

December 16/2011

(ICIS) -- Asian phthalic anhydride (PA) producers margins have firmed by USD70-100/tonne this week, widening for the first time in 18 months because of active restocking, several regional producers and traders said on Friday.

Several Chinese buyers said they are expecting the prices to continue rising in the near term.
Many traders and distributors have cleared their lower-priced inventories, so there are no more low-priced cargoes available, a Chinese buyer said. The producers will determine the PA spot prices for now, the buyer added.

A northeast Asian producer said it sold 5,000 tonnes of PA late on 15 December at USD1,480/tonne (EUR1,140/tonne) CFR (cost & freight) CMP (China Main Port). Feedstock orthoxylene (OX) prices were assessed at USD1,380-1,410/tonne CFR NE (northeast) Asia on 15 December.

On 9 December, the CFR CMP benchmark of PA was assessed at USD1,380-1,410/tonne, while the CFR NE Asia benchmark of OX was assessed at USD1,380-1,410/tonne.
Producers normally produce PA by using 950kg of OX, hence adding USD100/tonne to their PA prices to cover their conversion costs. In the current firmer market, PA producers margins have increased by USD54.75/tonne.

The last record of the PA-OX spread moving into positive territory was on 21 May 2010. Regional producers said the prices have increased because Chinese buyers have started to actively restock their inventory, after remaining at the sidelines resulted in tightened inventory. Many Chinese buyers refrained from participating in the PA spot market when the prices declined from mid-September to early December.

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