03 July 2012 10:11 [Source: ICIS news]
LONDON (ICIS)--The European benzene contract for July has been confirmed at €953/tonne, down €68/tonne from last month, as the initial settlement received further support from players on Tuesday.
The settlement was made at a US dollar concept of $1,183/tonne FOB (free on board) NWE (northwest Europe) and converted to the euro price at the agreed exchange rate of €1:$1.2418.
A raft of production problems in Europe have caused havoc in the benzene market as well as amongst derivative sectors since May, with benzene values at one point eclipsing those of derivative product styrene.
However, the arrival of imports from Asia and the US Gulf and the imminent restart of several domestic units has helped the market ease somewhat in the run-up to July.
After prompt numbers reached well above $1,400/tonne (€1,106/tonne) at one point in June, July pricing was now significantly lower, with bids this morning at $1,165–1,170/tonne CIF (cost, insurance and freight) ARA (Amsterdam-Rotterdam-Antwerp) and no firm corresponding offers.
August remains heavily backwardated, with bids at $1,075/tonne this morning – an indication of the economic and political malaise being felt in the eurozone and its effects on petrochemical demand.
The impact on the benzene market is twofold, however. The widespread bearishness is undoubtedly putting some downward pressure on pricing, but weak demand for polymers also inevitably means that less pyrolysis gasoline (pygas) is being produced for benzene production.
While some hydrodealkylation units are running, sources said output from these remains limited because of steady to firm toluene pricing.
Combined with a raft of derivative imports into Europe from both Asia and the US Gulf, many sources are nonplussed about the outlook for benzene in the coming weeks.
“There is no supply and no demand,” said one trader. “Nothing is moving about, so there is really no money to be made.”
($1 = €0.79)
Follow Truong Mellor on Twitter for daily tweets on the aromatics markets
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