16 November 2012 20:36 [Source: ICIS news]
HOUSTON (ICIS)--The US November cumene contract settled 14% higher on feedstock costs, sources confirmed on Friday.
Buyers and sellers confirmed that US cumene for November is being done at 64-66 cents/lb ($1,411-1,455/tonne, €1,101-1,135/tonne) FOB (free on board).
This is an 8 cent/lb increase from October’s levels of 56-58 cents/lb FOB.
Most of the increase was attributed to record-high contract prices for feedstock November benzene.
“We’re just treading water here,” a cumene producer said. “We’re waiting for 2013.”
Additionally, spot prices for the other cumene feedstock, refinery-grade propylene, have increased by 6-7 cents/lb in the past four weeks.
However, the surge in November cumene prices is not expected to weaken demand severely.
This is because downstream phenol market players said a slight rebound in the construction and automotive sectors has enable them to pass along the higher costs to end-users.
The strong demand is not enough to boost operating rates at those phenol plants, sources said.
“We have not seen massive demand destruction this month,” a phenol producer said. “It’s not volumes that are suffering, it’s our margins.”
Sources also added that they are seeing some cumene and phenol producers selling any excess benzene on the spot market rather than make incremental material.
“But it’s not as though anyone has a lot of excess benzene,” the cumene producer said. “It’s been too expensive to build inventories of it.”
Major US cumene producers include CITGO, Flint Hills Resources, Georgia Gulf, Marathon and Shell Chemical.
($1 = €0.78)
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