03 December 2012 14:39 [Source: ICIS news]
LONDON (ICIS)--The European benzene contract for December has been confirmed at €1,084/tonne, up €52/tonne from the previous month, as the initial settlement received further support from players on Monday.
The settlement was made at a US dollar concept of $1,408/tonne FOB (free on board) NWE (northwest Europe) and converted to the euro price at the agreed exchange rate of €1:$1.2989.
A large increase had been predicted by the market, as spot levels for December continued along a bullish path last week on stronger global pricing and export interest to the US Gulf region keeping Europe balanced-to-tight.
Meanwhile, global benzene fundamentals remain tight and this is expected to continue into 2013, with the adoption of lighter feedstocks among cracker operators keeping pyrolisis gasoline (pygas) supply limited.
Although spot levels were as high as $1,430/tonne, the settlement at $1,408/tonne demonstrates some recognition that the market will ease off in December closer to the holiday period.
“It is effectively only two and a bit weeks of consumption,” said one distribution sources, who expects to see a sharp drop in pricing across the aromatics complex by the middle of the month.
One trader said last week it had expected a number closer to $1,420/tonne in line with spot developments, but felt that the number for December should be lower as the high costs of benzene is making it difficult for downstream players to remain competitive.
Downstream, the European styrene market has seen a slight uptrend on pressure from benzene, but the spread between the two products remains weak from a production standpoint, as styrenics demand softens ahead of year-end.
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