30 January 2013 11:10 [Source: ICIS news]
LONDON (ICIS)--European benzene prices have started to rally ahead of the February contract settlement expected later this week, sources said on Tuesday, but a large decrease is expected nonetheless.
Following the record-high settlement at $1,529/tonne (€1,131/tonne) in dollar terms for January, spot levels had gradually eased off as the month progressed.
February spot values are at $1,395-1,420/tonne CIF (cost, insurance and freight) ARA (Amsterdam-Rotterdam-Antwerp this morning, with deals done earlier this week as low as $1,400/tonne.
Sources said that the high cost of benzene as a feedstock began to erode demand in January, and this was notably seen in the phenol and phenolic derivatives chain.
“This was always going to be an issue,” said one benzene trader. “Downstream players can’t stay competitive if [benzene] prices are so high, and end users will look for alternatives.”
After weeks of continued upward pressure from the US, European benzene prices began to falter in January in line with both the US and Asian markets, where better availability helped temper the bullishness.
While most players still regard the market as fundamentally bullish owing to feedstock restrictions, they argue that Europe currently lacks any clear direction.
“Prices have been all over the place,” one seller explained. “Availability has improved, which brought them down, but then some aggressive buyers pushed the market back up.”
Looking ahead, some styrene players expect that the numerous shutdowns scheduled for March and April could lead to better availability on benzene, putting some downward pressure on pricing in the months ahead.
“There are also shutdowns on phenol and cyclohexane later in the year, so there will be less benzene consumption,” said one styrene trader.
($1 = €0.74)
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