UpdateEurope April benzene falls €45/tonne

31 March 2008 16:42  [Source: ICIS news]

 

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LONDON (ICIS news)--April benzene contracts have been settled down €45/tonne ($71/tonne) on March in euro terms, on the back of a downturn in spot pricing and a weakened US dollar, but in line with expectations, a major European consumer and producer confirmed on Monday.

 

“I have confirmed with my suppliers at €742/tonne, or $1,172/tonne, at an exchange rate of €1 equals $1.5796,” the consumer said.

 

The monthly benzene contract is settled on an FOB (free on board) NWE (northwest Europe) basis.

 

The contract, which is agreed as a dollar concept and then converted into euros using an officially agreed exchange rate, only saw a decrease of $18/tonne in dollar terms but thanks to the weakness of the US currency the differential was much larger when converted to euros.

 

The March benzene contract was settled at an official exchange rate of $1 = €1.5121, from a $1,190/tonne on the basis of the then-current spot market.

 

This marked a change of $0.0675, or 4.5% in the dollar’s value relative to the euro.

 

Further confirmation of the number from other contract partners was pending but players who were yet to settle said that they would follow the initial settlement.

 

Negotiations for April benzene and styrene contracts in Europe had been delayed by the absence of a number of key settlers for an industry event in the US, with expectations of large decreases on both, players had said earlier in the day.

 

“A lot of people are in the US for [the] NPRA [the National Petrochemicals and Refiners Association] event in San Antonio,” said a benzene buyer source on Monday morning.  “We won’t be able to settle until this afternoon, when they’re up.”

 

A source at a major styrene producer had agreed with this, saying that their key settler was in the US for the event, along with a number of other contract partners.

 

Expectations from both benzene and styrene contracts had been that there would be reductions in contract pricing for both, with styrene traditionally following benzene in its monthly movements.

 

Central to the argument for the drops were a month-on-month fall in spot values and a considerably weaker dollar against the euro, although forecasts had been for even lower contracts as little as a week previously.

 

“On the basis of spot and the euro, I would imagine that the benzene contract would settle somewhere around €740/tonne [down €47/tonne on March],” said another buyer source who later commented that he had been “not far off”. 

 

Sources in the styrene market had said that a similar drop would be likely in their contracts if benzene buyers were successful in pushing for such large decreases.

 

($1 = €0.63)

By: Peter Salisbury
+44 20 8652 3214

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