US September cumene expected to fall 5-7% on benzene

07 September 2012 17:09  [Source: ICIS news]

US September cumene expected to fallHOUSTON (ICIS)--US September cumene contract prices are expected to fall by 5-7% because of lower feedstock costs, sources said on Friday.

The US September cumene contract is expected to settle lower by 3-4 cents/lb ($66-88/tonne, €52-70/tonne) from the August settlement.

The August contract was assessed by ICIS at 56-58 cents/lb FOB (free on board).

Most of the drop is coming from feedstock benzene, which came off a record contract high in August and shed 40 cents/gal, which translates to 5.43 cents/lb.

Additionally, refinery-grade propylene (RGP), the other cumene feedstock, has experienced steady pricing at low levels.

“It’s all tied to the feedstocks,” a cumene producer said. “When they go down, prices go down.”

The producer added that contract margins over feedstock costs have been largely steady in the third quarter, as supply remains steady and demand is slightly softer.

The weakness in demand stems from a lack of export opportunities of cumene’s key downstream product, phenol.

US spot phenol prices have been too high to move material into Asia, which has forced producers to keep their operating rates low, cutting into cumene demand.

Now that benzene has come off its record high, sources said exports into Asia could materialise, although phenol buyers are likely to insist on seeing some of the benzene savings passed down.

Additionally, phenol demand in Asia appears to be on the softer side, with prices increasing only because supply has tightened and feedstock costs are increasing.

Major US cumene producers include CITGO, Flint Hills Resources, Georgia Gulf, Marathon and Shell Chemical.

($1 = €0.79)


By: John Dietrich
713-525-2600



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