09 August 2011 15:52 [Source: ICIS news]
LONDON (ICIS)--The European aromatics market is in a state of confusion in light of the bearish wider economic sentiment, sources said on Tuesday, with benzene values going up and down as players try to assess the situation.
A plunge in crude futures on Tuesday amid growing fears surrounding the global economy initially pushed benzene values down, with offers for August and September falling to as low as $1,220/tonne (€854/tonne) CIF (cost, insurance and freight) ARA (Amsterdam, Rotterdam, Antwerp). Despite this, players said that the market was thin and therefore difficult to gauge accurately.
However by Tuesday afternoon the market appeared to have rebounded, with an August range touted at $1,240–1,270/tonne CIF ARA, while the first half of the month was talked at a $5–10/tonne contango.
Numerous sources were at a loss to explain the sudden upturn.
“[The benzene market] must be tighter than we expected, even though we haven't picked up on any production issues,” said one trader.
Another source said: “It’s a difficult market to get your head around at the moment. It is on the tight side, but with crude falling like it is that shouldn’t really matter.”
While widespread macroeconomic concerns and falling crude prices since last week saw a dip in benzene values, domestic market fundamentals are keeping supply/demand dynamics balanced to tight.
One styrene supplier said: “Benzene appears to be short for August, but we have seen the crude losses pulling the market in the opposite direction.”
With no imports expected for Europe in the coming weeks, as well as several shutdowns in southern Europe and the Mediterranean region, any potential slump in demand has been countered by relatively low stock levels.
The styrene market has been relatively quiet due to the traditional summer slowdown, and this has been exacerbated by a general sense of uncertainty in light of the wider turmoil seen for aromatics across the globe.
“It’s been a quiet day on styrene,” said one trader. “There is no real market for August at the moment.”
($1 = €0.70)
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