31 December 2010 10:26 [Source: ICIS news]
LONDON (ICIS)--The European January benzene contract was confirmed at €879/tonne, up €149/tonne from the previous month, as the initial settlement received further support on Friday.
The settlement was made at a US dollar concept of $1,155/tonne FOB (free on board) NWE (northwest Europe) and converted to the euro price at the officially agreed exchange rate of 1.3136.
The first producer to confirm the January price said it preferred not to comment in relation to the price negotiation and what influenced the upward movement.
However, in relation to the January contract price, one of the buyers said: “The US is tight and oil is up, but I would describe the European benzene market as balanced”.
A second buyer confirming €879/tonne FOB NWE as is it’s contract price, did not elaborate on the reason for the €149/tonne increase.
The benzene contract price is largely based on developments in the spot market, but global supply and demand dynamics are also pivatol in the negotiation process.
Spot benzene prices have firmed significantly in recent days hitting a five-month high, caused by rising crude and energy costs, strong demand and tighter global supply.
On Tuesday 28 December, January spot benzene traded five times at $1,160/tonne (€870/tonne) CIF (cost, insurance and freight) ARA (Amsterdam, Rotterdam, Antwerp), $5/tonne above the Janaury contract price.
The spot deals so far recorded for January 2011 are 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 down, 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 up, largely spurred 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.
($1 = €0.75)
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