Europe benzene spot prices firm on open arbitrage to the US

18 October 2012 13:08  [Source: ICIS news]

LONDON (ICIS)--European spot benzene prices continued to firm this week driven by the open arbitrage to the US, market sources said on Thursday.

“Benzene is tight in the US, but people have known about this for some time. [The] European benzene [price] is being dictated by the US,” said one aromatics trader.

The trader did not expect spot benzene prices to come down “sometime soon”.

Another trader source expected the tightness in the US to continue well into November and because of this it also forecast spot benzene prices to stay firm in Europe.

“Benzene firming is mainly US driven. It’s tight and you are seeing offers at arb [arbitrage] levels. Europe is responding to the US,” he said.

European October spot benzene is currently valued at $1,330-1,365/tonne (€1,024-1,051/tonne) CIF (cost and freight) ARA (Amsterdam, Rotterdam, Antwerp). This is an increase of $80/tonne compared with a week ago.

In the US, the spot benzene market closed at $4.85-4.95/gal FOB (free on board), which is circa $1,460-1,490/tonne FOB.

Prices in Asia are also supporting the upward momentum in the value of European benzene prices, one market participant said.

“Benzene is up today because Asia is higher and the US keeps firming,” said a third trader source.

Some 30,000 tonnes of European benzene is heard fixed for export to the US.

Although benzene prices have been moving in Europe and in other regions, styrene spot prices have been going in quite the opposite direction.

“Styrene is moving in the opposite direction to benzene and there is a clear disconnection between [feedstock] benzene and [derivative] styrene,” said a benzene producer.

Styrene prices have fallen by $85-90/tonne week on week because demand is flat and there is no shortage of material available compared with the early part of September when the market was short and industry was buying.

October and November spot styrene is currently valued at $1,530-1,560/tonne FOB Rotterdam.

“Industry players had their fingers burnt in September, when some [styrene] producers were buying rather than producing it. Nobody is buying,” said a buyer and seller in the styrene market.

($1 = €0.76)

By: Julia Meehan
+44 20 8652 3214

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