29 May 2013 10:52 [Source: ICIS news]
LONDON (ICIS)--The European benzene market has seen some upward movement ahead of the June contract settlement, sources said on Wednesday, with supply concerns for the upcoming month helping support the price gains.
June spot numbers opened the week at $1,340-1,355/tonne (€1,045-1,057/tonne) CIF (cost, insurance, freight) ARA (Amsterdam-Rotterdam-Antwerp), but have gradually edged up since then, supported by firmer oil and energy numbers and gains in the US market.
June deals have been done at $1,345/tonne and $1,355/tonne this week, and a premium for the first half of the month has emerged, with offers moving as high as $1,375/tonne because of anticipated supply restrictions and better derivative demand.
The May benzene contract was agreed at a US dollar concept of $1,385/tonne FOB (free on board) NWE (northwest Europe), and converted to the euro price of €1,056/tonne at the agreed exchange rate of €1:$1.3116.
With several cracker and aromatics units going into turnaround in June, benzene players are increasingly bullish for the upcoming month. However, the second half of May did not see spot numbers reflecting the anticipated tightness.
“There were styrene producers optimising output by selling benzene and buying styrene on the spot market,” one trader explained. “This kept a lid on some of the potential bullishness.”
Soaring benzene prices in April also led to European traders importing material from abroad to capitalise on the arbitrage. As much as 15,000 tonnes was brought into the ARA region since then, which helped redress some of the emerging tightness.
With several styrene units coming back online for June, derivative offtake is expected to pick up following a lacklustre 2013 so far. While some players are still cautious about any potential uptick in styrenics demand, the market is moving into a seasonal peak period for end-use sectors such as construction and packaging.
June styrene spot numbers have seen some upward movement as well this week, with deals done as high as $1,690/tonne FOB Rotterdam, although several players felt that this was driven by traders covering short positions, as opposed to any fundamental upturn in end-user sentiment.
($1 = €0.78)
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