Europe benzene prices spike due to Shell’s production issues

18 February 2010 12:38  [Source: ICIS news]

LONDON (ICIS news)--European benzene prices shot up by more than $150/tonne (€110/tonne) overnight as news of Shell Chemicals’ recent production issues in northwestern Europe suddenly triggered bullish sentiment, sources said on Thursday.

Shell Chemicals was having technical issues at its plant at Moerdijk, the Netherlands, which has an annual benzene capacity of 550,000 tonnes per year, according to data from the ICIS plants and projects database.

The Anglo-Dutch producer could not immediately be reached for comment.

On Thursday, the news was having considerable upward pressure on benzene prices, sources said.

“Sentiment was still bearish on Monday and people were short selling,” said a trader. “Now they see an opportunity to cover their shorts by going long, and this has resulted in spiking benzene values.”

A downstream source said that the sudden rise in benzene numbers had been totally unexpected.

“Before these issues, I anticipated that benzene numbers would continue to hover in the low $900s/tonne, as shutdowns in the related styrene markets are imminent,” said the source 

The source added that the weaker downstream demand should have a negative impact on benzene prices.

Nevertheless, it appeared that some market players had been waiting for some sudden movement after almost two weeks of very thin activity, and were now taking the opportunity to make some money.

At the beginning of the week, February benzene levels were pegged at $910-920/tonne CIF (cost, insurance, freight) ARA (Amsterdam, Rotterdam, Antwerp); on the morning of 17 February, a deal was done only slightly higher at $945/tonne.

As news of the production problems reached players in the benzene market, however, sentiment turned bullish and, on Thursday morning, a February deal was done at $1,065/tonne, while March deals were reported at $1,075-1,085/tonne.

Prices continued to move up in the afternoon, with February pegged at $1,090-1,105/tonne. March was slightly lower, talked at $1,080-1,095/tonne.

It was still uncertain if the high levels were sustainable. “[Whenever] Shell comes back up, I can see benzene prices come down by $200/tonne again,” said a trader.

($1 = €0.73)

For more on Shell visit ICIS company intelligence
For more on benzene or styrene, visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Madelon Ten Cate
+44 20 8652 3214

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