26 November 2008 17:03 [Source: ICIS news]
LONDON (ICIS news)--European benzene contract prices could fall around €90/tonne ($117/tonne) in December on weak demand and lower spot prices, downstream market sources said on Wednesday.
“Our expectation is more or less minus €90(/tonne),” said a major caprolactam consumer.
“For December, we will know the situation in two days but the big question is what will happen in January and the first quarter,” said the source.
In the polymers market, a German producer said it hoped that benzene had finally bottomed out.
“The bad thing is that we felt some stabilisation in the first two weeks of November and now spot prices have gone even lower. I hope that we are now at the bottom,” said the producer.
The producer also said that the further erosion in benzene’s value had frightened potential polymers buyers away from the market.
Another buyer, who purchases cyclohexane (CX) for the production of caprolactam, said that the December benzene contract price would have no impact on his business because he was totally out of the market.
“The December benzene contract, whether it’s formula or market related, will have no impact on our business because we are not buying any raw materials.”
The CX buyer said the only good news was that Brent crude had stayed at around $50/bbl since the middle of last week.
Further downstream in the nylon market, producers and consumers were expecting to see the December benzene contract price fall below €316/tonne FOB (free on board) NWE (northwest Europe).
“Last week we saw benzene prices go even low so [the contract price] will definitely fall in December,” reported a major European nylon producer.
In the phenol market, producers said they have cutback dramatically on production because of poor demand for every phenol derivate.
Many phenol producers also said that, whatever number the final December benzene contact price settles at, they believed it would fail to stimulate demand.
“Benzene is not making me nervous anymore,” said a phenol/acetone producer.
“The worst is behind us. What is making me nervous is propylene,” he said.
On Wednesday afternoon, December spot benzene traded twice at $250/tonne CIF (cost, insurance and freight) ARA (Amsterdam, Rotterdam, Antwerp), equivalent to €193/tonne, which was €123/tonne lower than the November contract price.
A benzene producer expected the December contract price to settle around the current December spot price of $250/tonne CIF ARA, though a December spot trade was rumoured lower at $240/tonne CIF ARA.
($1 = €0.77)
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