Europe benzene spot prices rise above $1,400/tonne

19 October 2012 12:42  [Source: ICIS news]

LONDON (ICIS)--European spot benzene prices continue to firm, supported by a wide-open arbitrage to the US, global market tightness and overnight gains in Asia, market sources said on Friday.

Spot prices are at $1,390-1,430/tonne (€1,070-1,101/tonne) CIF (cost and freight) ARA (Amsterdam, Rotterdam, Antwerp), up by $40-60/tonne from the previous night's close.

In Asia, benzene spot was pegged at $1,290-1,310/tonne FOB (free on board) Korea, while in the US benzene closed on Thursday at around $1,500/tonne FOB barges US Gulf Coast.

The gains seen in Europe this week have been driven by export demand from Europe to the US and tight global supply. In Europe, this is because of the lack of pyrolisis gasoline (pygas) as crackers prefer to utilise lights feedstocks.

“Everybody is cracking gas and that is why benzene is a bit limited at the moment. Producers are making lighter feeds,” said a broker source.

Traders in Europe have been looking to secure volumes for export to the US because of a wide open arbitrage. This has resulted in an active week in the benzene spot market and prices have moved up on a daily basis as a result.

Although crude prices came down, this did little to influence the direction of the spot benzene market.

The highest benzene deal recorded this week for October was $1,410/tonne CIF ARA.

Compared to a month ago, when styrene was the dominant aromatic in terms of supply and demand and prices were skyrocketing, the styrene market was very thinly traded this week and prices moved in the opposite direction to benzene.

Indeed, sources in both the benzene and styrene markets agreed that the only factor preventing styrene prices from falling further was the strength of the benzene market.

“With benzene as tight as it is and the styrene spread at around $200/tonne, producers might cut styrene production to produce more benzene and we might seen industry buying [styrene] again in November which will bring styrene prices up,” said a styrene producer.

Styrene traders confirmed that it had been a very quiet week in the spot market. “There are far more sellers than buyers and the market is now oversupplied,” said a normally active styrene trader.

“There is way too much volume around and it’s not a great situation to be a [styrene] seller at the moment,” the trader added.

A month ago, spot styrene was as high as $1,800/tonne FOB Rotterdam. October styrene is currently valued at around $1,550/tonne.

According to markets sources in the European aromatics community, some 40,000-45,000 tonnes of styrene have been fixed from the US for export to Europe.

Meanwhile, some 30,000 tonnes of benzene are currently being fixed for export from Europe to the US.

($1 = €0.77)

By: Julia Meehan
+44 20 8652 3214

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