Nov US benzene settles up 25 cents/gal on rising costs, demand

30 October 2009 21:17  [Source: ICIS news]

HOUSTON (ICIS news)--US benzene contracts for November increased by 25 cents to $2.85/gal ($857/tonne or €574/tonne) on Friday, driven by firming energy values and improved demand after styrene turnarounds in October.

The November contract at a 9.6% gain from October’s $2.60/gal was expected given US Gulf (USG) spot prices that straddled a wide range of $2.75-2.95/gal FOB (free on board) during the final week of the month, market participants said. Offers were down in the low $2.80s/gal by 30 October.

Climbing energy and a spate of refinery turnarounds kept US Gulf benzene supplies tight in October and contributed to higher month-on-month pricing despite low demand in styrene, phenol and other downstream sectors.

WTI (West Texas Intermediate) crude oil traded around the $78/bbl mark on 30 October compared with NYMEX prices around $69/bbl on 30 September. N+A naptha in the US Gulf was 18% higher during the same period, trading in the low $1.90s/gal in late October.

Benzene contract values are steered mainly by end-of-month benzene spot prices as directed by market trends in heavy energy feedstocks like crude oil and naphtha. This is especially true during periods of weak demand, producers said.

Market sources predicted November spot benzene would fall quickly after the contract settlement, as energy sectors were already slipping after a recent rally.

Some participants looked at tight supply, poor production economics and weak demand and predicted that November contract hikes would not pass beyond the margins of benzene buyers.

Major US benzene producers include BP Chemical, ExxonMobil, Flint Hills Resources, LyondellBasell, Shell, Sunoco and Total.

($1 = €0.67)

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By: Landon Feller
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