Asian purified terephthalic acid producers have proposed to add paraxylene price to their new pricing formula for selling PTA on term basis from next year, market sources said Friday.
PX is a key feedstock for PTA.
Currently Asian PTA producers and end-users are in term contract negotiations for next year. The sources said most PTA producers proposed to include PX prices in their pricing formula.
"During term negotiations for 2012, some PTA producers had proposed to use PX price for their PTA sales contracts. But it did not happen because of strong resistance from end-users," said a market source. "But this time, end-users seem to have no choice as majority of PTA producers have proposed to add PX pricing."
According to the sources, the new formula will have 50% spot PTA price. The rest 50% will comprise the PX component which will take into account 50% Asian Contract Price and 50% Platts CFR Taiwan/China assessments.
The move by the PTA producers was being taken to reduce PX cost pressure, said the sources.
In 2012, the Asian PTA producers suffered from negative margins due to high PX feedstock prices. According to Platts' data, PTA margins fell to a record-low of minus $109.11/mt on September 12.
"Asian PTA producers suffered from negative margins throughout 2012 because of high PX prices. They need to hedge PX cost somewhat otherwise it is difficult for them to survive," one of the sources said.
The sources said the term contract negotiations will be longer than usual and discussions would likely continue to next month.
