Europe spot benzene prices continue to firm

30 January 2008 16:19  [Source: ICIS news]

LONDON (ICIS news)--Europe benzene spot prices continued to firm on Wednesday, a day ahead of the February contract settlement, with market sources unsure why values were up.

 

A trader reported February deals at $1,100/tonne (€748/tonne) CIF (cost, insurance and freight) ARA (Amsterdam Rotterdam Antwerp) and at $1,110/tonne CIF ARA.

 

When asked about the higher numbers the trader said that there was “a lack of sellers in the morning”.

 

Other spot deals were recorded at $1,083/tonne CIF ARA, $1,085/tonne CIF ARA and $1,088/tonne CIF ARA, all for February.

 

Other normally active participants failed to see what was behind the recent surge in benzene activity seen in recent days.

 

“It started Friday evening and then on Monday and Tuesday we were seeing much higher prices,” one trader commented. “I don’t know why there is such interest,” added the trader, who described the market as “pre-contract” and “not a real market”.

 

A source at a major benzene producer said that he had heard that business had been done above $1,100/tonne but was not sure why the market was so firm.

 

“It’s difficult to say what is the main support in the market,” commented another trader.

 

“OK, there are issues with some crackers but despite the supply issues the market is not that much tighter because there are problems on styrene production,”  she added.

 

INEOS Olefins declared force majeure on ethylene from its 320,000 tonne/year G4 cracker in Grangemouth, UK, on 23 January, market sources said.

 

The impact on benzene production was not clear but INEOS Olefins produces some 295,000 tonnes/year at the facility. A company spokesman was not prepared to comment on production at the site on Wednesday afternoon.

 

The rising benzene spot prices come a day ahead of the traditional opening of February contract price negotiations. The January contract settled at €702/tonne FOB (free on board) NWE (northwest Europe) at a time when spot benzene was trading in a $1,030-1,050/tonne CIF ARA price range.

 

The highest February deal heard at $1,110/tonne CIF ARA translates in to €755/tonne, marking a possible February increase in the contract of €53/tonne. February deals had been done as recently as Monday at levels as low as $1,055/tonne CIF ARA, some $55/tonne lower than current values.

 

The contract price has typically been settled on the last day of the month by several major producers and consumers. Some of the parties involved in contract negotiations included ExxonMobil, Total, Saudi Basic Industries Corp (SABIC), Dow, BASF, Bayer, INEOS Phenol and DSM. 

 

($1 = €0.68)

 

By: Julia Meehan
+44 20 8652 3214

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