16 October 2008 16:03 [Source: ICIS news]
By Peter Salisbury
LONDON (ICIS news)--Spot European benzene values tumbled a further $100/tonne (€74/tonne) on Thursday to a 31-month low in line with Asia, as crude oil and naphtha also fell and concerns grew over forward demand.
“It’s energy, but I think what we saw in ?xml:namespace>
Spot benzene was widely rumoured to have traded at $720/tonne CIF (cost, insurance and freight) ARA (Amsterdam, Rotterdam, Antwerp), down $100/tonne from a deal the previous day, and $220/tonne, or 24%, lower than business conducted at $940/tonne CIF ARA on Monday.
With the spot market valued at $710-730/tonne CIF ARA by global chemical market intelligence service ICIS pricing, the market had found its lowest levels since a trade at $715/tonne CIF ARA in March 2006.
The 31-month low was in synch with the Asian market, which had seen trading fall into the $600s/tonne earlier in the day.
Benzene had traded at $1,170/tonne CIF ARA on 23 September, some $450/tonne, or 39%, higher.
On 11 July, benzene had traded at a record high of $1,445/tonne CIF ARA, meaning values had dropped 50% in just over three months.
Players cited falling demand on fears over the global economy, further exacerbated by a traditional lack of consumption in the fourth quarter in Europe, as a driving factor.
Tumbling energy prices, with Brent crude into the $60s/bbl, pushing naphtha values below $500/tonne and stock market losses earlier in the day were also seen as reasons for the steep falls, worsening already poor sentiment over the chance of market recovery.
The spread between spot naphtha and benzene was also a wide talking point.
Where earlier in the week the differential between the two had been $300/tonne plus, even with naphtha talked as low as $490/tonne CIF NWE (northwest
This, however, was customary, players said.
“For Q4 (the fourth quarter), $300/tonne was a bit overdone,” said one industry trader. “Demand is poor anyway and the spread typically crunches in Q4.”
Added another trader: “In early December last year, the benzene-naphtha spread was $100/tonne. And crude oil was $90/bbl then!”
European players were unsure where their domestic market might bottom out.
“The longer it falls, the closer we get,” said the same trader. “With naphtha prices falling, it is still profitable to produce, though, and production would have to be reduced to see benzene hold.”
Added another trader: “It depends on crude. If we hit $50/bbl, it could be $520/tonne benzene. “If crude holds at $73/bbl, the bottom is here.
"Players have started to question why such a big collapse.”
When asked when the collapse might abate, another trader said “I have absolutely no clue”.
($1 = €0.74)
For more on benzene visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect
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.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections