31 March 1997 00:00 [Source: ICB]
As benzene spot prices continue to increase, European buyers and sellers remain too far apart on the second quarter contract price to come to any agreement. In some firms the impasse has lead to the discussions moving out of the hands of the people who are normally involved in contract negotiations, said one player.
Spot levels have surged from $330/tonne in early March to $375/tonne recently paid by a consumer for a 1000 tonne parcel of prompt product and other deals have been done in the mid-$370s/tonne on a 'paper washout' basis (buying back a contract to release physical commitment).
April numbers have steadily gained strength during March and are quoted in the range $350-360/tonne depending on timing.
Europe's prices are way ahead of the US where rates are around $1.06-1.07/gal making exports to Europe profitable. Parcels from Brazil, the Virgin Islands and the US are expected to arrive in late April and sellers argue that in the tight market, US price and freight cost should be settlement level, equating to DM590-600/tonne.
Buyers are unenthusiastic to accept a DM100/tonne plus increase on first quarter levels and are talking at levels DM530-535/tonne. One benzene producer argued that if it could not make money in tight markets, when could it? He said producers had received no concessions from downstream styrene producers when styrene prices were sky high and did not feel like giving any quarter now.
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