Europe spot benzene trades at a five-month high

28 December 2010 16:58  [Source: ICIS news]

LONDON (ICIS)--European spot benzene prices have hit a five-month high on rising crude and energy costs, strong demand and tighter global supply, traders said on Tuesday.

“Energy is strong, balances are getting tighter and the US is also strong,” said a European aromatics trader.

January spot benzene traded five times at $1,160/tonne (€882/tonne) CIF (cost, insurance and freight) ARA Amsterdam, Rotterdam, Antwerp), according to traders.

The deals came two days ahead of the January benzene contract settlement, which is typically based on deals done in the final days of the previous month.

Settlers of the benzene contract in Europe said they expected to agree on a January contract price on Thursday 30 December.

The December benzene contract settlement was based on a dollar price of $960/tonne FOB (free on board) NWE (northwest Europe), some $200/tonne below Tuesday's spot values.

The spot deals so far recorded for January 2011 were the highest since 2 April this year when a trade was recorded at $1,225/tonne CIF ARA. Spot benzene spiked in April because of a tight supply situation which took some market participants by surprise.

However, after reaching a 2010 high, benzene prices started to drift in a sourtherly direction, with the lowest deal of the year recorded on 2 July at $822.50/tonne CIF ARA owing to the market lengthening following the arrival of Asian imports. At the same time crackers were running heavier feedstocks and several production issues and shutdowns had ended.

Since July, the value of spot benzene has gradully been moving in a northerly direction, largely spured on by rising crude and enegy costs, but also on the back of strong demand for styrene and firmer markets in Asia and the US.

Looking ahead to 2011, expectations were that reformers would run at low rates as demand for gasoline eased.

Additionally, the US was expected to remain structurally short on aromatics, which could pull significant volumes from Europe.

“The US will remain a sourcing market next year,” said one styrene trader. “Certainly if ethylene prices stay high. Combined with turnarounds in the first quarter, this will limit any imports from North America into the ARA region.”

($1 = €0.76)

For more on benzene visit ICIS chemical intelligence
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By: Julia Meehan
+44 20 8652 3214

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