Europe September benzene settles down €29/tonne

29 August 2008 18:56  [Source: ICIS news]

LONDON (ICIS news)--September benzene contracts have been settled down €29/tonne on lower energy and spot prices, with many market participants surprised that the number was not lower, buyers and sellers confirmed on Friday.

A final seller confirmed on Friday afternoon that they had settled their September business at a dollar concept of $1,286/tonne FOB (free on board) NWE (northwest Europe) and converted to a euro price of €871/tonne FOB NWE on the basis of an officially agreed exchange rate of €1 = $1.4771.

Earlier in the day, two buyers and two sellers had agreed their contracts at this level.

Market participants attributed the decrease to lower energy complex and spot benzene values seen during August, with many buyers saying on Wednesday that they had been surprised by the rebound seen in the spot market over the past week, and had hoped for a lower settlement.

“If we had settled on Monday, we would have seen a completely different story,” said one buyer.  “The market really hasn’t been at these levels recently, and it isn’t representative of market balance, but that’s how it works I suppose,” the buyer said.

A source at a major producer, however, argued that weak derivative demand in August did not mean that the market was in any way long.

“The market came down with crude and spot numbers,” the source said.  “But with the possible Gustav damage in the US, and reformers still running at poor margins, crackers running on light feeds like butane and swing production units off, and no real incentive for producers to produce more, we are almost back to where we were in May and June.”

The producer source added that the next week would be “interesting” given geo-political tensions between the US and Russia and the impending arrival of hurricane Gustav on the Gulf coast of America.

Spot benzene had traded as high as $1,300/tonne CIF ARA during the past week, although September bids and offers had fallen to $1,260-1,270/tonne CIF ARA by Friday afternoon, according to global chemical market intelligence service ICIS pricing.

($1 = €0.68)

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By: Peter Salisbury
+44 20 8652 3214

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