01 September 2009 11:29 [Source: ICIS news]
LONDON (ICIS news)--The European September benzene contract price has been confirmed down €168/tonne ($240/tonne) from August at €576/tonne, after the initial agreement between two producers and one consumer received further support from another consumer on Tuesday.
The settlement was made at a dollar concept of $828/tonne FOB (free on board) NWE (northwest Europe) and converted to the euro price at an officially agreed exchange rate of $1.4364 to €1, one of the producers involved said.
“We negotiate the contract price in dollars, and both $828/tonne and $827/tonne reflect €576/tonne based on the official exchange rate,” one of the producers said.
The lower contract price, which saw a drop of more than 20% from August, had been widely anticipated by market players, after the spot market saw significantly lower numbers throughout the month.
It was the first time this year that the monthly contract price experienced a drop. Despite this, some players said they deemed the agreed level on the high side.
A trader said earlier that it felt that the deals that were done on 28 August, and on which the contract negotiations were based, were on the high side, especially considering the amount of selling interest in the market.
The source added that it was likely for September spot trading to take place below the contract level for the majority of the month, as several crackers were already running on heavier feedstocks, consequently producing more pyrolysis gasoline (pygas), which left the market long and sentiment bearish.
Indeed, soon after the September agreement had been settled, one September inter-trade deal took place $58/tonne below the contract price at $770/tonne, as selling interest was still widespread, sources said.
On Tuesday, players assessed the market slightly up at $780-810/tonne CIF ARA, but October was notionally in a $20/tonne backwardation, showing that sentiment remained weak .
($1 = €0.70)
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