There has been no contract price settlement for paraxylene in Asian market since February this year and the spot is used to peg derivative PTA values. Japan's JX Nippon Oil and Energy although finished its negotiations for the May Asian Contract Price for paraxylene but could not reach a settlement. Meanwhile spot paraxylene prices dropped US$70-75 a ton in March only to recover partially in April. In Europe too, May contract failed to settle while March and April saw spot numbers losing over US$80 a ton.

The drop in paraxylene prices against the firmness in naphtha values, has led to sharp decline in the spread between the two. After enjoying a superlative strength in early 2011 at close to US$1,100 a ton in Europe and US$745 a ton in Asia, the spread calmed down and hovered between US$600-800 until late 2013 in Europe and between US$400-600 in Asia. In March and April this year, it both the markets saw it drop between US$200-400 a ton.

In the first week of May, paraxylene markers in Asia dropped US$29 on the week to be assessed at US$1,153-1,154 a ton FOB Korea. US spot paraxylene prices also fell US$15 on the week, assessed at US$1,130 a ton FOB USG. European spot paraxylene was assessed at US$1,105 a ton FOB ARA.

Downstream, PTA prices declined in Asia amid falling paraxylene cost and bearish polyester markets as well. PTA markets were mute in China as there were some restrictions on transportation conditions. In US, the April PTA price had not been set as market participants continued to wait for settlement of the US paraxylene contract, the key variable used to settle PTA numbers.

This led to a cascading effect on the polyester chain. Asian mono ethylene glycol prices fell amid weak buying interest and falling PTA futures in China. Polyester chip markets remained range bound as May Day holiday drew to a close. In China, semi dull chip market saw no bullish factors as PTA futures edged down. Polyester filament yarn trading was seen improving in Asian markets but PFY producers mostly pegged offers stable, and some provided discounts amid relatively thin trading and downstream players on the sidelines. Polyester staple fibre markets also remained stable amid thin trading in Asia, with a few offers dipping.

Courtesy – YnFx Weekly PriceWatch Report and Daily Textile Prices service