FocusUS July benzene seen rising with record-high spot prices

28 June 2012 23:40  [Source: ICIS news]

HOUSTON (ICIS)--Market participants said on Thursday that the July benzene contract was nominated $4.30/gal ($1,287/tonne, €1,030/tonne), based on tight inventory positions this week, which have pushed spot prices higher.

The nomination is up 19 cents/gal from the June benzene contract and follows an all-time high spot range heard late on Tuesday, according to ICIS.

July benzene spot prices have been volatile the past month alongside tight inventory positions held by some traders.

The increase has left some downstream styrenics market participants scratching their heads, as crude prices have fallen below the $80/bbl mark and benzene demand from the styrene market is soft during a seasonal slowdown.

There have also been no major production issues heard during the month.

One major benzene trader was seen buying heavily during the week to cover supply position, which pushed spot benzene prices up to $4.60-4.68/gal FOB (free on board) on Tuesday with an average at $4.64/gal FOB.

Benzene was heard to have traded at $4.60/gal on Tuesday, but was not confirmed.

The $4.64/gal FOB average on Tuesday was the highest spot price according to ICIS.

However, some trade sources have said this week’s price increase actually reached highs not seen in 46 months dating back to August 2008.

One aromatics trader said the all-time high for benzene was at a deal at $4.68/gal in late August, while other aromatics sources believe it was $4.60/gal.

According to ICIS the previous all-time prompt benzene spot deal was done on 28 August of 2008 at $4.60/gal FOB.

“I think $4.60/gal back in August 2008 is rarefied air,” said an aromatics broker. “I am not sure if I know of a deal any higher in my experience.”

July bid/offers were briefly seen on Wednesday at $4.30-4.80/gal FOB, before moving to a more narrow range of $4.35-4.75/gal FOB, with an average of $4.55/gal FOB.

On Thursday, July benzene was bid lower at $4.25/gal FOB against no offer levels.

Trade sources said the increase in spot prices this week should support the July benzene contract nomination.

The July benzene contract is expected to be settled on Friday.

($1 = €0.80)

By: Brian Balboa
+1 713 525 2653

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