Europe Phthalic Anhydride Producers Predict May Rises
LONDON (ICIS news)--European phthalic anhydride (PA) profits are now so pressed that producers can no longer avoid passing on further cost increases to customers, producers and consumers said on Friday.
Some manufacturers went further, saying that prices may increase by more than an expected rise in May feedstocks, restoring some of the historic margins that had eroded since the start of 2009.
“There may be some re-capture of the lost differentials,” said a producer.
PA producers were anticipating increases in May feedstock orthoxylene contracts of €20-50/tonne ($27-67/tonne) on average, predominantly due to tightening supply levels as well as continued strong performance in the related paraxylene market, sources said.
“Every euro cent increase in raw materials has to be passed one-to-one into the PA market,” said a trader.
PA producers had suffered from reducing margins since the beginning of 2009 due to low demand, preventing cost increases being passed on to consumers.
Although consumption was generally still seen by sources as significantly below 2008 levels, some optimism was returning to the market. A number of producers noted an increasing order book in May, fuelled by increased appetite from the Asia Pacific region - specifically China - and eastern Europe, leading to hope that easing conditions could facilitate a recovery of margins.
“The indications are that consumers are looking more optimistic on market conditions,” one producer said.
“PA has to go up to restore margins,” added another.
A trader said it was offering customers spot material at an increase of €35/tonne in anticipation of feedstock hikes and was “optimistic this may work”.
Several traders and sellers observed an increase in enquiries in April compared to January-March. One producer reported an increase of around 15% in contract demand for April from March.
Some manufacturers went further, saying that prices may increase by more than an expected rise in May feedstocks, restoring some of the historic margins that had eroded since the start of 2009.
“There may be some re-capture of the lost differentials,” said a producer.
PA producers were anticipating increases in May feedstock orthoxylene contracts of €20-50/tonne ($27-67/tonne) on average, predominantly due to tightening supply levels as well as continued strong performance in the related paraxylene market, sources said.
“Every euro cent increase in raw materials has to be passed one-to-one into the PA market,” said a trader.
PA producers had suffered from reducing margins since the beginning of 2009 due to low demand, preventing cost increases being passed on to consumers.
Although consumption was generally still seen by sources as significantly below 2008 levels, some optimism was returning to the market. A number of producers noted an increasing order book in May, fuelled by increased appetite from the Asia Pacific region - specifically China - and eastern Europe, leading to hope that easing conditions could facilitate a recovery of margins.
“The indications are that consumers are looking more optimistic on market conditions,” one producer said.
“PA has to go up to restore margins,” added another.
A trader said it was offering customers spot material at an increase of €35/tonne in anticipation of feedstock hikes and was “optimistic this may work”.
Several traders and sellers observed an increase in enquiries in April compared to January-March. One producer reported an increase of around 15% in contract demand for April from March.
quoted from: www.ICIS.com
