29 December 2011 14:10 [Source: ICIS news]
LONDON (ICIS)--While a significant increase is expected for the European January benzene settlement, styrene players are still uncertain of how much of this should be passed on, sources said on Thursday.
“We are looking at a rise for next month,” said one major styrene consumer. “But nowhere near some of the numbers being quoted by sellers.”
Following the December benzene settlement at $895/tonne (€689/tonne) FOB (free on board) NWE (northwest Europe), which players felt was lower than expected even for what is traditionally the quietest month of the year, a sizeable increase is expected for January.
Buoyed by healthy restocking sentiment for the new year following the holiday season, January benzene prices have gradually moved up over the course of December.
Strong pull from the key downstream styrene sector has kept benzene demand healthy this month, following a November punctuated by a spate of shutdowns in that market.
“A lot of the styrene producers were taking advantage of that cheap benzene in December too,” one trader added.
Other factors also seemed to push the numbers up in December. Sources pointed to a firmer US market as well as steadily rising crude values.
While trading below $1,000/tonne at the beginning of December, January prices moved up as the month progressed by over $150/tonne. Deals for January delivery were heard this week as high as $1,125/tonne.
As a result of the steep rise anticipated for benzene next month, styrene sellers are pushing for an increase of €100/tonne or more.
However, styrene consumers feel that a simple pass through of the benzene increase would not be an accurate reflection of current market dynamics.
December demand across all key derivatives has slowed down, and there is still some length for the monomer, as evidenced by the steady stream of exports to Asia this month.
The European December styrene contract was confirmed at €1,094/tonne, representing a rollover from the previous month. An initial agreement at this level was followed by an additional pair of settling parties, with the aim of achieving a single number for the European barge contract process in the future.
The number was then later followed by the third and final pair of settling parties with a view to harmonising the European styrene market around a single monthly number.
($1 = €0.77)
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