European benzene market softens in line with US

12 February 2010 12:22  [Source: ICIS news]

LONDON (ICIS news)--European benzene values came off by almost $70/tonne (€51/tonne) this week, as the domestic market followed bearish sentiment in the US, players said on Friday.

A weaker euro and a slowdown in Asia ahead of the Lunar New Year were also mentioned as reasons behind the fall in domestic levels.

“The weakness in Europe is directly related to the weakness in the US,” a benzene consumer said.

The consumer added: “The US was firm for a long time, and with the imports arriving and the styrene arbitrage from the US to Asia closing, numbers were bound to come off.”

Players said that up to 80,000 tonnes of benzene was exported from Asia to arrive in the US in March, while up to 20,000 tonnes was reportedly shipped from Europe to the US to arrive in February. A trader confirmed that he had shipped approximately 10,000 tonnes this month.

The source said that the lower numbers in the US were not just caused by the imports, however.

“The spread between naphtha and benzene was too wide for a long time,” he said, adding that “Asia and Europe will soon be the leading markets, and it won’t be long before the US will start following us.”

Meanwhile, the Asian market was also expected to soften, with a week-long holiday expected in most of the region from 15 February to celebrate the Lunar New Year.

On Friday morning, Asian values were pegged at $895-910/tonne FOB (free on board) Korea for April.

In the US, prices were pegged at $3.40-3.50/gal ($1,023-1,053/tonne) on Friday morning, down almost $0.20/gal ($60/tonne) within a day, but were expected to come down even further.

The domestic market in Europe was balanced and mainly following other regions, players said.

In a thin market, European activity was kept underground for most of the week, but on Friday morning deals were reported at $930-935/tonne CIF (cost, insurance, freight) ARA (Amsterdam, Rotterdam, Antwerp) for February, down $25-35/tonne from Thursday’s close.

March deals were reported lower at $920-925/tonne, or rolls were done whereby March was $5/tonne below February. April was $5/tonne below March.

It was uncertain how long the backwardation would be sustainable, however, with several sources expecting the market to turn flat before turning into a contango by the end of February.

($1 = €0.73)

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By: Madelon Ten Cate
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