05 December 2005 00:01 [Source: ICB]
The December benzene contract fell by €85-87/tonne last Wednesday – around 15% – to create a split settlement of €490-492/tonne. This was based on spot levels of $578-580/tonne.
Market players had previously predicted a rollover, but the past week saw spot numbers dip below $600/tonne. The slide in spot slowed last month after a massive $190/tonne fall in October, when styrene outages curbed benzene demand.
Cumene lags behind other benzene derivatives due to a stagnant bisphenol A market. Prices are continuing to fall – partly due to lower polycarbonate demand. But cyclohexane is relatively healthy, with material still being shipped across the Atlantic.
While demand from styrene producers improved in November as plants came back onstream, there are still questions as to how strong fundamental polystyrene demand is in Europe.
Benzene consumption is expected to grow at 4%/year but demand for aromatics is outpacing supply. New cracker capacity in the Middle East is based on ethane, which produces minimal amounts of pygas, a key benzene feedstock.
At the top of the chain, northwest European refinery margins are expected to reach an all-time high in 2006 according to Swiss investment bank Credit Suisse First Boston (CSFB), due to a lack of spare capacity. CSFB forecasts that Rotterdam refining margins will peak at $9/bbl in 2006, breaking the existing record of $7.91/bbl set in 2005.
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