Europe benzene, styrene fall 24% in 1 month

08 October 2008 20:27  [Source: ICIS news]

LONDON (ICIS news)--Spot benzene and styrene prices continued on Wednesday to fall in Europe with values already down 23-24% inside a month - on the back of perceived global length and weakening demand alongside ongoing energy complex losses and fears over the global economy.

“Have you seen anyone in a department store lately?” asked one trader, attempting to sum up the general feeling of the market.

Benzene values had dropped to $930-940/tonne (€679-686/tonne) CIF (cost, insurance and freight) ARA (Amsterdam, Rotterdam, Antwerp) by the close of business on Wednesday, down $65-70/tonne from the previous evening, already at intra-year lows.

A November styrene trade was widely mooted at $1,230/tonne FOB (free on board) Rotterdam on Wednesday afternoon, down $70/tonne from a trade at the same time the previous day.

Benzene and styrene had been seen trading as high as $1,220/tonne CIF ARA and $1,620/tonne FOB Rotterdam in September, with current levels some 23-24% lower.

The market was seen as being on a firm downtrend, with a number of factors coming into play.

Energy complex movements had been seen as a key driver of late, and, with crude oil falling into the $80s/bbl overnight, downward pressure was evident. However, as West Texas Intermediate (WTI) rebounded $2/bbl in afternoon trading, players looked to Asia and the US, with the latter region at 21-month pricing lows.

“The realisation is that Asia is in trouble – it is massively long on benzene and styrene,” the same trader said. 

Naphtha was also seen as a key component, with the European market assessed on Wednesday evening at $650-660/tonne CIF NWE (northwest Europe) by global chemical intelligence service ICIS pricing. Lower numbers showed generally weak derivative demand, market participants said, pulling benzene and styrene, by extension, down.

“In the past, the naphtha traded at $200/tonne under benzene,” another trader said. “I think we could be going back there if we see demand remain weak.” 

The difference between benzene and styrene, typically $250-300/tonne, was also called into account, again on weak demand for both products.

Downstream polystyrene (PS) demand was estimated to be down 9-15% for the year to date and phenol demand only slightly better.

“We are seeing a reluctance to buy. People are looking at the financial markets, and they are worried. I don’t blame them,” said a source at one phenol producer.

The global economy, alongside failing financial markets and institutions, was causing an extremely gloomy outlook for the fourth quarter and beyond.

“People don’t want to spend money right now, and Asia clearly hasn’t picked up on Christmas demand,” one trader said. “If people aren’t buying things, then how can we expect there to be demand?”

($1 = €0.73)

For more on benzene and styrene, visit ICIS chemical intelligence
To discuss issues facing the chemical industry, visit ICIS connect

By: Peter Salisbury
+44 20 8652 3214

< previous article(ICIS Chemical Business podcast November 2, 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly