Soaring European benzene prices plague wider market

13 June 2012 11:43  [Source: ICIS news]

Prices are risingLONDON (ICIS)--Soaring European benzene prices continue to wreak havoc in the wider petrochemical market, sources said on Wednesday, as the availability restrictions for material extend into July.

This has pushed domestic benzene prices up higher than current values for downstream styrene, which continues to struggle with poor derivative demand and downward pressure owing to the arrival of imports into the ARA (Amsterdam, Rotterdam, Antwerp) region.

June benzene prices continue to hover around the $1,400/tonne (€1,120/tonne) level this week, with offers as high as $1,450/tonne seen. Styrene, however, remains lower at $1,3001,350/tonne. Several sources felt that despite this, the styrene market is still too high.

“Nobody is going to buy unless they are desperate,” said one trader. “Everyone knows that imports are arriving in the second half of the month, and with Brent still below $100/bbl, the styrene market should be lower than $1,300/tonne.”

A premium for benzene in early July has also emerged in Europe, with nobody certain how long the raft of current production problems will last and what the impact on availability will be in the coming weeks.

The challenge for benzene players now is that with styrene stocks building up, as well as higher phenol inventories this month owing to a bearish Asian market effectively cancelling the need for European volumes, there is nowhere for material to go.

“Crackers need styrene and cumene demand to keep running,” said one trader.

The current economics of the market mean that crackers will want to run hard despite the negative crack spread in order to capitalise on the higher benzene prices.

One trader predicted an operating rate of at least 80% was optimal, and with around 60% of output sold at the June benzene contract price, this meant that a further 20% would be diverted to downstream styrene and cumene units.

How long the current squeeze on benzene will last remains unclear. While significant volumes are expected to arrive in Europe later in June to help ease the tightness, there is talk that one major producer in the US is down.

As a result, many expect that the market there will push up towards European prices, and close the arbitrage window from the US into the ARA region, limiting any import volumes.

There is talk that material is being shipped to Europe from Asia, although one source said that volumes were being shipped to the US Gulf instead, where prices were up by as much as $0.45/gal over the course of last week.

($1 = €0.80)

Follow Truong Mellor on Twitter for daily tweets on the aromatics markets


By: Truong Mellor
+44 208 652 3214



AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

ICIS news FREE TRIAL
Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index