Price and market trends: Europe benzene prices firm on open arbitrage to the US

26 October 2012 08:50  [Source: ICB]

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 say.

Spot prices were at $1,390-1,430/tonne (€1,070-1,101/tonne) CIF (cost and freight) ARA (Amsterdam, Rotterdam, Antwerp) on 19 October, 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 18 October at around $1,500/tonne FOB barges US Gulf Coast.

TIGHT GLOBAL SUPPLY

The gains in Europe were driven by export demand from Europe to the US and tight global supply. In Europe, this was on a lack of pyrolisis gasoline (pygas) as crackers prefer to utilise lights feedstocks.

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

Traders in Europe were looking for volumes to export to the US as an arbitrage opened wide, leading to an active week in the benzene spot market and daily price rises.

Although crude prices fell, this had little influence on the direction of the spot benzene market.

Compared to a month ago, when styrene was the dominant aromatic in terms of supply and demand and prices were skyrocketing, the styrene market has been thinly traded 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 see the industry buying [styrene] again in November which will bring styrene prices up," said a styrene producer.

Styrene traders confirmed a very quiet week in the spot market. "There are far more sellers than buyers and the market is now oversupplied," said a styrene trader. "It's not a great situation to be a seller at the moment."

Spot styrene reached $1,800/tonne FOB Rotterdam a month ago. October styrene is currently valued at around $1,550/tonne.

Sources in the European aromatics community said 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 being fixed for export from Europe to the US.


By: Julia Meehan
+44 20 8652 3214



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