24 August 2010 17:28 [Source: ICIS news]
HOUSTON (ICIS)--US September benzene barge prices could be reversing their week-long uptrend because of cheaper crude oil, sources said on Tuesday.
A slew of benzene spot transactions occurred at $3.02-3.03/gal FOB (free on board) on 23 August, capping an 11-day increase from $2.82/gal on 12 August. That rise flew in the face of crude oil prices dropping 4% during the same time, closing at $73.10/bbl on 23 August compared to $76.15/bbl on 12 August.
Benzene buying ideas cooled on the morning of 24 August, however, as September bids fell to $2.96/gal DDP (delivered, duty paid). Lower benzene prices in Europe and Asia and a pessimistic energy outlook convinced buyers to get transactions back below $3.00/gal, sources said.
“The bids got lower per energy,” one trader said.
Prices for reformulated gasoline blendstock for oxygenate blending (RBOB) also fell to $1.8810/gal on 23 August, 4% lower than $1.9548/gal on 12 August.
Benzene producers could try to keep prices above $3.00/gal as September contract negotiations start late in the week, however. Benzene buyers and sellers generally use late-month spot price averages to set contracts.
Meanwhile, benzene prices in Europe, considered the current driver for global benzene market, fell below $900/tonne ($3.00/gal) CIF (cost, insurance and freight) ARA (Amsterdam, Rotterdam and Antwerp) early in the week, closing any hope of arbitrage opportunities across the Atlantic, sources said.
That has some traders thinking that US benzene could have further to fall.
“Europe is below $900/tonne, and the energy effect is still limited given we are coming from $2.82/gal,” a trader said.
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