26 December 2012 17:00 [Source: ICIS news]
HOUSTON (ICIS)--As 2012 comes to a close, many aromatics market participants have said they believe the US benzene market will remain strong in 2013 citing the tight supply availability and the continued global financial situation.
These market fundamentals lent support to a series of record highs in the benzene market for 2012.
US benzene contracts settled at a record high three times in 2012, the first coming in August at $4.60/gal.
The current December benzene contract is at a record high price of $4.93/gal, up by 3 cents/gal from the previous month, which was also a record high.
Heading into the first quarter of 2012, market participants did not expect to see a drop in demand due to re-stocking. They expect the first quarter of 2013 to be strong again, as traders return to the market and prepare for the upcoming summer driving season.
Typically aromatics prices fall during the fourth quarter as producers and some consumers finalise their positions and start de-stocking inventories for end-of-year tax purposes.
However, the tight supply conditions in the third and fourth quarter of this year have made it difficult for producers and consumers to de-stock material. Because of this market participants expected the market to break seasonal trends and remain high through the rest of the year, and continue into 2013.
The tight supplies have been attributed to reduced output of pyrolysis gasoline (pygas), including more ethanol displacing reformate in the US gasoline pool, and US shale oil production yielding less benzene.
Meanwhile, the continued global economic uncertainty continues to weigh on the benzene market.
The uncertainty that has developed in 2011 caused mixed outlooks from North American aromatics players for 2012 and cautious position taking.
The European debt crises, which has impacted Greece and threatens other economies in the region, and the ongoing fiscal cliff debate has also cause benzene traders to take a bullish global outlook.
Many chemical industry executives also see the ongoing fiscal cliff deadlock in the ?xml:namespace>
The so-called fiscal cliff is a combination of automatic income tax increases and cuts in federal government spending that will kick in on 1 January, unless Congress and the White House can agree on terms to lessen the blow.
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