30 March 2010 17:33 [Source: ICIS news]
LONDON (ICIS news)--European April benzene prices look set to increase by at least $150/tonne (€111/tonne), as spot prices continued to move up in a tight prompt market, sources said on Tuesday.
“I expect the contract to settle at $1,140/tonne at least,” said one trader, who is not involved in the negotiations. Others market players had earlier stated that an increase of $100/tonne minimum was realistic, considering spot movements throughout March.
The March benzene contract was agreed at $999/tonne or €741/tonne, but spot values had since continuously increased, especially for prompt material.
Sources commented that this was a result of unexpected tightness in the prompt market. It was said several players had gone short for March, as they anticipated a longer market later in the year considering a significant amount of downstream shutdowns scheduled in the spring.
However, from mid-March onwards, a premium of at least $50-80/tonne was noted for prompt material, compared to delivery at any later stage, after it appeared that some traders had urgent requirements for product. A lack of imports furthermore contributed to a tight market, according to players.
A producer, who sold one of the highest prompt deals at the time at $1,150/tonne, said it only settled for this price as it “did not dare ask for anything more.” This indicated a complete absence of ceiling values, players said, and later more prompt deals were reported around the $1,200s/tonne.
On Tuesday, several April deals were done at $1,140-1,180/tonne CIF (cost, insurance, freight) ARA (Amsterdam, Rotterdam, Antwerp), and it was rumoured that bids for delivery in the first half of April had even moved to above the $1,300s/tonne.
This would indicate a premium of more than $100/tonne between prompt and any other material.
Meanwhile, a hefty backwardation was noted into May, with several reported deals on Tuesday morning at $1,100-1,120/tonne, as players expected the tightness to disappear in the coming weeks.
The April contract was expected to settle on Wednesday, 31 March, and will be at least partly based on the deals done on Tuesday.
Contracts settle on a free on board (FOB) northwest Europe (NWE) basis.
($1 = €0.74)
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