Europe April benzene outlook largely bearish

05 April 2013 09:49  [Source: ICIS news]

LONDON (ICIS)--European benzene sentiment for April is largely bearish, sources said on Friday, with lengthening availability and slow downstream offtake keeping the outlook for the coming month subdued.

“The arb [arbitrage window] into the US is not open,” said one seller. “This is keeping some length in Europe.”

The April benzene contract was agreed at a US dollar concept of $1,267/tonne (€992/tonne in euro terms) FOB (free on board) NWE (Northwest Europe), but spot values have stayed below that level so far this month, with deals for the current month done at $1,250/tonne (€963/tonne using today’s exchange rate) and $1,255/tonne.

There are nonetheless some sources that believe the market will see an upturn this month, although they concede this largely depends on how the US market unfolds.

With the styrene turnaround season in full swing now, and slower offtake from the phenol sector, other players do not see European demand improving until June at the earliest.

“The US will start pulling material then,” said another producer. “That is when we will see the real story.”

Nevertheless, the current benzene price levels are still historically high. This has led to some speculation there was still room for the market to come down further, although others said that the floor had been reached in late March around the $1,220-1,230/tonne.

One seller believed the market was currently being supported by speculation regarding May and June, when both pricing and demand are expected to recover, and the fundamental tightness that has plagued the market since early 2012 returns.

“There is a lot of product sitting around,” the seller said. “The benzene spread with naphtha is around $370/tonne now, and it averaged about $350/tonne in 2012 even with the price volatility then.”

“This $350/tonne or more spread with naphtha instead of $250/tonne could be the new equilibrium now,” said another supplier.

($1 = €0.77)

By: Truong Mellor
+44 208 652 3214

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