Spot benzene, styrene, buoy March contract ideas

25 February 2008 17:43  [Source: ICIS news]

LONDON (ICIS news)--Styrene monthly contract partners expect to see widespread hikes in March contracts due to spot prices rising more than $100/tonne (€67/tonne) month on month and talk of large increases in benzene values, players said on Monday.

Spot benzene and styrene for March loading were assessed at $1,170-1,190/tonne CIF ARA and $1,480-1,500/tonne FOB Rotterdam at 15:00 GMT, up $120/tonne and $105-120/tonne respectively from closing indications on 25 January.

At current exchange rates, this would equate to a rise in values of €70-80/tonne.

“Styrene’s going to go up a bit,” said a source at a key producer. “If you consider the market price, which was at about $1,400/tonne in January, it’s now at about $1,500/tonne - $100/tonne higher. So I assume it can go up €50/tonne.”

Other market talk was that, depending on where benzene contracts settled, producers could push for increases of as much as €60/tonne or even €70/tonne.

“It all depends on benzene,” said another industry source. “Crude and benzene were falling last week, but they have stabilised now. €50-60/tonne are the numbers being discussed but negotiations won’t really start until later this week.”

Industry buyers and sellers in the benzene market were more tightlipped about where contracts for the month might settle, although “it looks like they’re going to go up”, said one buyer source.

Spot benzene last week traded within $15/tonne of the record high deal confirmed in April 2007, during February, with forward buying attributed to a cracker outage at Cepsa’s Huelva, Spain, production unit and reported future turnarounds at benzene units owned by ConocoPhillips, Dow and ExxonMobil in coming months.

Styrene values had also increased considerably throughout February on the basis of benzene and ongoing production issues at BASF’s production facility at Antwerp, alongside the March turnaround at LyondellBasell’s joint venture with Bayer, which produces 640,000 tonnes/year of styrene.

Fluctuating crude oil, which had reached a new record high of $101/bbl, was also effecting the markets, with players describing benzene and styrene as “volatile” and “susceptible to any upwards or downwards pressure” throughout the week.

The presence of industry buyers normally absent from the market had also allowed sellers to push for higher prices for prompt material throughout February, sources said.

Benzene contracts are normally set on the basis of spot pricing on the last day of the month, with the concept set in dollars and the final settlement made in euros at an officially agreed exchange rate, usually the previous day’s close, players said.

With benzene as one of its major feedstocks, styrene is normally settled on the basis of any upstream movements, other styrene market participants said.

($1 = €0.67)

By: Peter Salisbury
+44 20 8652 3214

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