US benzene prices flat, likely to fall moving forward - marketer

15 March 2012 21:06  [Source: ICIS news]

HOUSTON (ICIS)--US benzene spot prices are nearly flat through May, which suggest a higher probability it will eventually fall if crude prices do not spike, a petrochemical marketing group said on Thursday.

Wilf Kimball, vice president for The Plaza Group, said the spot market currently remains flat for several reasons.

“US demand for derivatives - particularly styrene - is flat with the arbitrage closed in all directions. Cumene demand would be much higher, but there are two major phenol unit shutdowns scheduled for March and April.”

Kimball also cited a recent drop in benzene spot prices following the 3 cent/gal ($9/tonne/tonne, €7/tonne) increase in the March contract price, which settled at $4.23/gal.

Also putting downward pressure on the benzene spot market was news that approximately 60,000 tonnes of benzene is scheduled to arrive in the US from Asia during the month.

Benzene trade particpants have been reluctant to take any positons on the market moving forward, saying only that any direction would be closely tied to crude movement.

Some aromatics sources have said they expect demand to improve in March and April, as refiners stock up in preparation for the US summer driving season, which could push prices higher. Market participants added that the expected arrival of benzene from Asia would meet just a portion of demand

“60,000 tonnes is normal import quantity needed under standard North American demand profile,” said a US styrene producer.

The styrene producer said with cracker shutdowns in Europe and low refinery rates, it would be not be surprised if the arbitrage opened to Europe and cleaned up supply in North America.

“We are net benzene buyers here in the US, the imports will be easily absorbed into the market.” said another styrene producer. “If it’s an overdose of supply, then the market will sit on it. But business is picking up as we come into the March and April timeframe.”

March US benzene spot prices are at $4.08-4.17/gal FOB (free on board), while April benzene pricesa re at $4.06-4.17/gal at according to ICIS.

($1 = €0.77)

By: Brian Balboa
+1 713 525 2653

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