Thai paraxylene producer PTT Aromatics and Refining has concluded its 2013 term supply contracts at a premium of around $14/mt, up from last year's $9/mt, a company source said Wednesday.
The producer settles its annual supply contracts based on a formula of 50% PX Asia contract price and 50% Platts CFR Taiwan/China spot price plus an "alpha" or premium that it negotiates with buyers.
For the 2012 term supply, PTTAR had offered three to four cargoes of 5,000 mt each. For 2013, while the exact volume has not been decided yet, the source said it will be reduced to one to two cargoes each month amid higher domestic consumption expected.
"The volume will be decided after the domestic contracts are settled," he said. Negotiations between PTTAR and downstream Thai purified terephthalic acid producers are still on going, he added.
Last week, major Chinese PTA makers had issued a joint statement stating that they would cap the 2013 term premium for feedstock PX at $7.50/mt, due negative margins.
But PTTAR was able to negotiate a higher premium with its buyers -- all traders this year -- due to the free trade agreement between the Association of Southeast Asian Nations, of which Thailand is a member, and China. The FTA exempts the Chinese buyers from paying a 2% import duty on Thai PX.
PTTAR has two PX plants in Map Ta Phut with a combined capacity of 1.2 million mt/year.
