Petrochemicals: European aromatics prices fall

10 October 2011 00:00  [Source: ICB]

Macroeconomic worries are affecting confidence in benzene and styrene markets, forcing demand and prices down

European aromatics contract prices have dropped significantly in October as slowing demand and bearish sentiment pressures markets. Benzene contracts saw the greatest decline, falling by €118/tonne ($156/tonne) from the previous month to €701/tonne FOB (free on board) NWE (Northwest Europe).

Sources agreed that the outlook for the rest of 2011 was glum. "People are already thinking about end-of-year destocking," said one benzene player. They added that a significant drop for crude oil prices was possibly on the horizon, which would only add to the current macroeconomic instability.

Downstream, styrene contracts fell between €75-85/tonne taking the range for October to €1,086-1,133/tonne FD (free delivered) NWE. Styrene sources said that bearish sentiment and careful inventory management ahead of the year-end would keep buying interest for European styrene muted for the rest of this year. US aromatics markets are also facing the same uncertain outlook as their European counterparts.

Since early August, US aromatics prices have fallen on a combination of weaker crude, lower stock markets and slowing demand. The weakening fundamentals led US benzene contracts for October to fall by 68 cents/gal ($204/tonne, €153/tonne) to $3.33/gal FOB and also forced benzene spot prices to hit a 10-month low of $3.30-3.35/gal FOB on September 23.

ADDITIONAL PRESSURE

Market players expect the US September styrene contract to settle in early October at either a rollover or a decline because of a 12 cent/gal drop in September benzene contracts.

The 68 cent/gal fall in the October benzene price has put additional pressure on October styrene contracts which will likely be agreed upon in November.

US styrene spot prices in early October were at 57.25-58.25 cents/lb FOB, down from 67.75-68.25 cents/lb in late August.

Additional reporting by Brian Balboa in Berlin

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