Europe July benzene contract confirmed at €656/tonne

01 July 2009 10:38  [Source: ICIS news]

LONDON (ICIS news)--The European July benzene contract price has been agreed up €131/tonne at €656/tonne on the back of continued tightness and strong spot prices, as the initial settlement received further support from the market, sources said on Wednesday.

The settlement was made at a dollar concept of $922/tonne FOB (free on board) NWE (northwest Europe) and converted to the euro price at an officially agreed exchange rate of $1.4058 to €1, a producer said.

“The spot market is very high right now,” said one buyer. “The base has moved up, so the contract price has to follow.”

“The market is tight,” said another consumer. “The settlement is close to where spot levels are, so it is fair, but it is still difficult to justify such a high price.”

Although there had been talk of imported material coming into Europe to help ease market tightness, the volumes expected were now significantly lower than initially reported. Moreover, a large percentage of the imported cargo had already been booked.

“It will take longer for inventories to grow,” said one buyer.

In order to help balance supply levels, BASF said last week that it would be switching on its hydrodealkylation (HDA) unit at Ludwigshafen, Germany, to produce benzene from toluene. There was also talk of other European producers following suit in July.

Another source said that the current spread between benzene and styrene was incredibly low, and that producers would push for a sizable increase in July.

“The [styrene] market is long at the moment, however,” the source said. “It will be tough for players to push through the full benzene increase.”

($1 = €0.71)

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By: Truong Mellor
+44 208 652 3214

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