04 October 2009 18:09 [Source: ICIS news]
BERLIN (ICIS news)--The spread between benzene and styrene was likely to narrow towards the end of the year as de-stocking processes were about to start, making the outlook for the rest of 2009 bleak, market sources said on Sunday.
At the same time, hardly anybody in the industry was confident enough to make any firm predictions.
“If you have a crystal ball, please let me know,” one aromatics source at DSM said, when explaining the opaque situation in the market.
“People are living hand to mouth, it is difficult to forecast any real numbers,” a benzene buyer said on the sidelines of the 43rd European Petrochemical Association (EPCA) meeting.
The majority of players agreed, however, that the spread between benzene and styrene was too big at the moment and was likely to narrow in the coming months.
A difference of about $200/tonne (€138/tonne) between the two products was usually profitable, according to sources, although one producer was more ambitious when he said that a minimum of $300/tonne was needed.
However, in the week ending 2 October, the spread had widened to almost $400/tonne, which would be unsustainable towards the end of the year, sources said.
“The backwardation on styrene between October and November is more than $100/tonne,” one styrene buyer said. “People are already speculating that the market will come off at the end of the year,” the source added.
A styrene producer said: “The spread between benzene and styrene will go back to $100-200/tonne.”
The source added: “The spread between naphtha and benzene is good, and I suspect benzene can come down to the $600s-700s/tonne. If that happens, styrene can go down to $900-1,000s/tonne.”
Global chemical market intelligence service ICIS pricing assessed October spot benzene values at $720-7/tonne CIF (cost, insurance, freight) ARA (Amsterdam, Rotterdam, Antwerp), while styrene for the same month was at $1,100-1,120/tonne FOB (free on board) Rotterdam.
($1 = 0.69)
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