East-West benzene arbitrage remains closed on thin spread

21 December 2011 02:33  [Source: ICIS news]

SINGAPORE (ICIS)--The arbitrage window for shipping benzene from Asia to the US and Europe remains closed as the price spread is still narrow, despite the recent increases in the global benzene market, traders said on Wednesday.

US benzene prices for January firmed late on Tuesday to $3.70-3.74/gal (€2.81-2.84/gal) or $1,106-1,118/tonne FOB (free on board) Barges on the back of higher energy values, and were $46/tonne higher than current Asian values, according to ICIS.

The January values in Europe also rose on Tuesday to about $1,090-1,099/tonne CIF (cost, insurance & freight) ARA (Amsterdam-Rotterdam-Antwerp), $24-30/tonne higher than Asian numbers.

Asia’s spot benzene prices were $10/tonne higher at $1,060-1,075/tonne FOB Korea at the start of Wednesday’s trading session, backed by an overnight hike in WTI crude futures to above $97/bbl.

The price hike in Asia on Wednesday was also supported by the upturn in US and Europe benzene values late on Tuesday.

Freight rates for 9,000 tonnes of benzene from South Korea, which is the largest exporting nation in Asia, to the US was in the mid $50/tonne levels, said shipping sources.

Freight rates from the west coast of India to ARA for 10,000 tonnes of benzene were in the low $90s/tonne.

The arbitrage window from Asia to the US and Europe has been closed for most of the fourth quarter of 2011, resulting in limited exports, said traders.

They estimated that about 20,000 tonnes of benzene may be loaded in December from Asia to the US, about 20,000-30,000 tonnes less than the regular volumes shipped on a monthly basis.

($1 = €0.76)

Additional reporting by Lester Teo, Brian Balboa and Truong Mellor

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By: Mahua Chakravarty
+65 6780 4359

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