30 August 2011 11:42 [Source: ICIS news]
LONDON (ICIS)--Softening demand for the forthcoming month is expected to lead to a decrease in the European benzene contract for September, sources said on Tuesday.
Planned shutdowns in September and October in the downstream styrene market will keep buying interest for benzene subdued, most expect, following a slow albeit relatively solid August.
The volatility seen for crude futures in the past few weeks, however, is keeping many in the market cautious, as wider economic jitters could potentially affect demand and pricing.
“It’s very tough to predict how it will unfold,” said one downstream source. “The market is being pulled both ways really - at this point I have no idea.”
Benzene values remained surprisingly resilient in the face of sharp crude losses in August, as several shutdowns in southern Europe and the ?xml:namespace>
But whether this buoyancy will continue into September remains uncertain. With the downstream styrene market expected to see reduced activity in the light of the numerous turnarounds scheduled for September and October, this will most likely mean that benzene demand will be softer.
With September and October styrene already trading at a $40–50/tonne (€28–35/tonne) premium to August since the start of the month, prices are likely to soar in the coming weeks.
“Benzene prices in September will come down because the material simply isn’t needed right now,” said one trader. “In fact, that is probably the only thing stopping styrene from going as high as $1,600/tonne.”
The August benzene contract was settled at a US dollar concept of $1,263/tonne FOB (free on board) NWE (northwest
This week, September has traded at $1,170–1,185/tonne CIF (cost, insurance, freight) ARA (
While a certain amount of rallying ahead of the contract settlement is expected, sources do not expect the market to reach parity with the August figure.
($1 = €0.69)
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