31 October 2008 16:36 [Source: ICIS news]
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LONDON (ICIS news)--Initial Europe November benzene contracts have been settled down 60% at an unprecedented €481/tonne ($625/tonne) on weakening demand and energy complex values, sources at major producers and consumers confirmed on Friday.
“We have settled the November benzene contract price with all our suppliers at $412/tonne, equal to €316/tonne,” a consumer source said.
Three major producers and consumers confirmed that the settlement was made at a dollar concept of $412/tonne FOB (free on board) NWE (northwest Europe) and converted to a euro price of €316/tonne FOB NWE at an officially agreed exchange rate of €1 = $1.3035, according to the source.
October contracts were settled at a dollar concept of $1,171/tonne FOB NWE, converted to €797/tonne FOB NWE at an exchange rate of €1 = $1.47.
“It was very low demand and energy was one of the fundamental drivers,” said a consumer source.
Added a source at one major consumer: “It’s a question of demand. Final products are not being produced.
“We hope that naphtha does not increase by $100/tonne as it has in the past, or there will be trouble,” said a source at a major producer meanwhile.
Players said the lack of end-user demand was directly attributable to fears currently being realised of a major global economic downturn.
Players said that the drop could be a major issue for those consumers who still had material in stock which had been instantly devalued by 60%.
Market participants said they had never seen a drop of this magnitude before in monthly petrochemical market settlements.
($1 = €0.77)
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