Europe July benzene values spike on US prices, domestic tightness

11 July 2012 12:17  [Source: ICIS news]

European benzene prices riseLONDON (ICIS)--Ongoing tightness for July, gains on crude futures, as well as firmer prices in the US, have all helped put more upward pressure on the European benzene market, sources said on Wednesday.

Price ideas for the current month are comfortably back above $1,300/tonne (€1,066/tonne).

The market opened the week with July trading at $1,235/tonne, but has since rocketed upward in line with a spike for US Gulf numbers. Bids and offers for July this morning were at $1,325-1,350/tonne CIF (cost, insurance, freight) ARA (Amsterdam, Rotterdam, Antwerp).

According to one source, the gains seen for benzene in the US have been driven by higher energy values and some short covering amongst traders, which has pushed prices in the region above $5.00/gal FOB (free on board) this week.

This also pushed the Asian market up by as much as $20/tonne on Wednesday, although the inter-month backwardation between August and September is steep at $60–70/tonne.

August remains heavily backwardated in Europe at $1,245–1,275/tonne, an indication that the current bullishness for domestic benzene is still at least partially driven by some of the supply concerns that have plagued the market since April 2012.

While the European July contract eased by €68/tonne in line with lower spot numbers at the end of June, it appears as if there is still some tightness for the current month. There was talk that some hydrodealkylation units were switched on to help balance the market, but the impact of this has so far been relatively understated.

“Demand for polymers is still weak,” added a seller. “This means that there is also less pygas [pyrolysis gasoline] available for benzene production.”

Higher benzene prices have helped push the downstream styrene market up, with prices for July gaining as much as $50/tonne over the course of the week so far.

“The market is up,” said one trader, “but it is wholly benzene driven. Demand is still fairly weak.”

The bullishness seen for benzene in recent months has in some ways helped support prices in the styrene market, which continues to struggle with quieter than normal derivative demand. However, with prices for the feedstock at one point higher than the derivative, this also kept styrene activity muted because of the unviable economics involved.

($1 = €0.82)

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

By: Truong Mellor
+44 208 652 3214

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