23 June 2011 14:43 [Source: ICIS news]
LONDON (ICIS)--European benzene values eroded in June to below $1,100/tonne (€770/tonne) on the back of lengthening supply and softer crude prices, market sources said on Thursday. This represents the lowest the market has been since December 2010.
“We saw around 90,000 tonnes of imported cargo come into Europe at the end of May,” said one trader. “It was therefore a very heavy market in June.”
Additionally, several players said that buyer interest began to taper off in June. This follows buoyant demand earlier in the year on the back of unplanned production problems, severely restricting availability and causing a spike in pricing.
Soaring crude values in the first half of 2011 helped support the firming of European spot numbers, although the gradual arrival of imported material from Asia was to leave some players uncertain of how the market would unfold as the third quarter approached.
Another source said: “Even with cargo coming into Europe, firm crude numbers and solid demand were able to hold benzene prices up pretty well.”
With crude futures tumbling on the back of a firmer US dollar and concerns regarding wider economic growth, some benzene players are remaining cautious ahead of July.
“July should be more balanced,” said the trader. “It would seem that the bottom of the market has been reached, but volatility for crude could keep benzene numbers down.”
As a result, many market sources were unwilling to speculate where the monthly contract would settle for July.
“It will definitely come down again, but it is a tough one to call,” said one seller. “A lot will depend on the strength of the euro versus the dollar as well.”
The European June benzene contract was agreed at €834/tonne ($1,191.4) FOB (free on board) NWE (northwest Europe), down by €55/tonne from the May settlement.
This settlement was made at a US dollar concept of $1,190/tonne and converted to the euro price at the officially agreed exchange rate of €1 to $1.4272.
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