Petrochemicals: Benzene rockets to two-year peak

07 February 2011 00:00  [Source: ICB]

Global values repeatedly reach fresh highs after price spikes

No sooner had Asian benzene pricing reached a one-year peak (see ICIS Chemical Business, January 24-February 6, 2011) than values continued their ascent to their highest levels since hitting $1,150/tonne (€838/tonne) on September 1, 2008.

The 28-month high followed upward price movements in the US and Europe, where tight supply and firming crude oil values leant support to the market. Asian spot values were reported at $1,150-1,160/tonne FOB (free on board) Korea on January 27.

GLOBAL GAINS
The market has seen a rapid upsurge in the past few weeks. Numbers reached $1,120-1,130/tonne on January 19, up by $25/tonne from the previous day's close because of overnight gains in other regions. The day before, US and European prices had been reported at $4.19-4.21/gal FOB Barges and $1,230-1,240/tonne CIF (cost, insurance and freight) ARA (Amsterdam, Rotterdam, Antwerp) respectively. Light sweet crude, meanwhile, was pegged at $91/bbl for February delivery on January 19, with Brent at $98/bbl.

By January 20, Asian benzene had once again risen, climbing by another $15-20/tonne to $1,135-1,150/tonne. Sentiment remained firm in the region, supported by firming US values and limited supplies. US benzene was said to be tight for prompt delivery, exerting further pressure on pricing.

Meanwhile, US spot numbers had climbed to a 27-month high of $4.20-4.30/gal FOB - the first time they had breached the $4.00/gal mark since October 2008.

On January 26, spot material had edged even higher to $4.30-4.40/gal FOB, up from $3.85-4.00/gal on the first day of the month.

CONTRACT EXPECTATIONS
February benzene contracts in the US were tipped to surpass $4.00/gal because of the upsurge in spot prices during January - and eventually settled at $4.35/gal.

European benzene has also seen gains, partially owing to the capsizing of a vessel carrying 2,400 tonnes of sulfuric acid from BASF's site in Ludwigshafen, Germany, to Antwerp, Belgium, on the river Rhine on January 13. The incident was expected to disrupt shipments for several weeks and saw some benzene players scrambling for material to cover any potential shortness.

In addition, the market was bracing itself for a flurry of maintenance turnarounds toward the end of February and into March.

On February 2, European values were reported in a $1,360-1,375/tonne range.

Additional reporting by Truong Mellor in Europe and Brian Balboa in Houston


Author: Andy Brice and Mahua Chakravarty



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