23 February 2012 12:11 [Source: ICIS news]
LONDON (ICIS)--European benzene prices have softened this week due to some length for February, sources said on Thursday, with lower demand from the phenol and cumene sectors due to a raft of upcoming scheduled turnarounds also putting downward pressure on the market.
Improved pyrolisis gasoline (pygas) availability due to firmer propane costs this month means that there is currently ample feedstock for benzene production, which is keeping domestic supply levels up.
After breaching the $1,300/tonne (€988/tonne) level in January on feedstock tightness and bullish crude and energy numbers, domestic benzene levels have gradually edged downwards.
This week opened with February benzene trading at $1,255-1,260/tonne CIF (cost, insurance & freight) ARA (Amsterdam-Rotterdam-Antwerp). Offers for February cargo were as high as $1,275/tonne, before the market faltered midweek and came down to close at $1,245-1,260/tonne on Wednesday February 22.
A rebound in crude prices brought the February market back up to $1,255-1,280/tonne this morning, but activity was largely muted amid growing uncertainty about how sustainable these levels are.
The bid/offer range for February material has widened to $30/tonne this week, the growing disparity between buyers and sellers generally a sign that the market is unsure of a general direction.
The push and pull of opposing factors – the upstream bullishness versus the slower end-use demand as well as the sense that the market is currently overheated – is also adding to the confusion.
March Brent was valued at $124.29/bbl this morning, the highest level seen since July 2008, supported by a weaker US dollar and rising tensions between Iran and the west.
One trader said that it was only the current bullishness on crude and naphtha that was keeping benzene prices from dropping sharply.
“I fear when I see crude prices rising this much,” he added.
“The only thing you do know is when it gets to these high numbers, the market has to come down some time,” said another trader.
($1 = €0.76)
Follow Truong Mellor on Twitter for daily tweets on the aromatics markets
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