27 March 2013 15:41 [Source: ICIS news]
LONDON (ICIS)--The European benzene market is likely to see a sizable drop in the monthly contract settlement for April later this week, as spot values continue to move down amid bearish oil and energy numbers, global losses and slower offtake from key derivative markets, sources said on Wednesday.
While the domestic market did see some brief spikes last week as a handful of players looked to cover positions, the overall outlook for benzene in April remains bearish as a result of numerous styrene turnarounds and weak demand from the phenol sector.
“Benzene and styrene are both heading south,” said one trader.
April deals were done as high as $1,280/tonne (€998/tonne) earlier this week, but the market has gradually eased off in line with Asia and the US. Several deals for April were done this morning at $1,255/tonne.
The March contract was settled at $1,380/tonne FOB (free on board) NWE (northwest Europe) and converted to the euro price of €1,054/tonne at the agreed exchange rate of €1:$1.3093.
While spot activity in the US market, a key driver for Europe over the last few months, has been limited this week owing to the AFPM Conference in San Antonio, Texas, sentiment has grown bearish in the region as demand slows down.
One source in the market said that it suspected that the levels seen earlier in the month were not sustainable, adding that one propylene oxide/styrene monomer (POSM) unit is down while another is rumoured to be going into turnaround soon.
How this upstream bearishness will affect contract talks in the European styrene market remains unclear, although the majority of players expect some downward movement in line with raw material costs. Ethylene in Europe is increasingly long, and one styrene consumer expects it to be down by as much as €50/tonne.
“The styrene contract price will fall,” said one trader, “although spot prices seem to be holding up.”
($1 = €0.78)
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