03 August 2010 14:44 [Source: ICIS news]
LONDON (ICIS)--European benzene spot prices have shot up by over $50/tonne (€38/tonne) this week as a result of firming crude and energy prices as well as renewed buying interest, sources said on Tuesday.
By last week’s close, August benzene prices had reached $860-875/tonne CIF (cost, insurance & freight) ARA (?xml:namespace>
However, crude prices on 2 August rose to their highest levels since early May, pushed up as a result of buoyant stock markets and a weaker US dollar. This led to a rise in benzene prices, with deals for August reported at $910-930/tonne.
By Tuesday morning, August and September were pegged flat around $930-950/tonne, and deals for September were seen at $935-945/tonne. A trade for August was also talked at $940-945/tonne but could not be confirmed.
“The market is looking very bullish at the moment,” said one trader. “Crude is firmer, and the other regions are looking stronger, too.”
However, sources all agreed that the current buoyancy was unexpected, even with gains of more than $2/bbl in crude.
There had been no clear upturn in buying interest in the market; and, given the current spread between benzene and styrene, demand seemed likely to decrease in light of the poor margins involved.
“The market just got tested, and it was interesting to see that industry was not buying at all,” said one industry player. “The only buyers were traders, notably Asian traders, while industry was on the sell side.”
Another trader said: “I believe this was an overreaction. But it will not last, unless there is a real production problem somewhere. But, as far as I know, there is nothing going on.”
($1 = €0.76)
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