03 April 2013 12:52 [Source: ICIS news]
LONDON (ICIS)--The April European benzene contract has been confirmed at €992/tonne, down €62/tonne from the previous month, as the initial settlement received further support from players on Wednesday.
The contract was initially agreed late on Thursday, 28 March at a US dollar concept of $1,267/tonne FOB (free on board) NWE (northwest Europe) and converted to the euro price at the agreed exchange rate of €1:$1.2772.
A decrease had been widely expected, as European spot numbers have softened over the course of March amid lower demand from the styrene and phenol markets as well as weaker numbers in both the US and Asia.
The US April contract was agreed down 33 cents/gal to settle at $4.36/gal last week, the third consecutive monthly drop for the US benzene contract.
A source in the US market said 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.
Regarding the outlook for Europe this month, one supplier felt the market was at a crossroads. Domestic prices saw a sharp decline towards the end of March, with deals done as low as $1,220/tonne, but the market now appears to have stabilised around the $1,260-1,270/tonne level.
“Some see the market strengthening in April, but this will depend a lot on the US,” the supplier said. “The arb [arbitrage window] into the US is not open now, and there is still length in Europe.”
Others agreed, arguing a more bearish standpoint, as demand from the key styrenics sector has also failed to pick up. With several styrene units on turnaround in April and May, some players do not expect to see benzene demand pick up until after this period.
“The spread between benzene and naphtha is around $370/tonne, which is still historically a high level,” said one player. “There is a lot of product sitting around, so prices still seem quite high right now. Around May or June is when we will see the real story."
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