31 May 2012 17:21 [Source: ICIS news]
LONDON (ICIS)--An initial European benzene contract price (CP) for June has been agreed at €1,021/tonne, an increase of €73/tonne from the previous month, one seller confirmed on Thursday.
The settlement was made at a US dollar concept of $1,270/tonne FOB (free on board) NWE (northwest Europe) and converted to the euro price at the agreed exchange rate of €1:$1.2438.
An increase had been expected, although the magnitude of it was the topic of much discussion, particularly over the last two weeks.
May has proven to be a volatile month for benzene, with prices initially resisting any severe downturn in line with the drop in crude and energy futures before posting some losses mid-month amid weak sentiment coming from ?xml:namespace>
However, a minor rebound in crude futures towards the end of May combined with rumours of production problems at several European aromatics units pushed prices up sharply, with a May deal occurring as high as $1,400/tonne.
However, prices soon started to edge back down, with many players sensing that the market had become overheated. There was a contango that emerged for the first half of the month, with offers still at $1,400/tonne to test any shortness amongst traders, but this too appears to have subsided as June approaches.
A markedly weakened euro over the course of the month has also impacted contract discussions amongst players, as a rollover in dollar terms would have still resulted in an increase of €40-50/tonne.
“There is a fascinating complexity to it this month,” said one trader. “It is quite a unique occurrence. I vaguely remember something like this about eight years ago, but nowhere near as severe.”
Further confirmation from other players is pending.
Follow Truong Mellor on Twitter for daily tweets on the aromatics markets
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