25 June 2013 10:39 [Source: ICIS news]
LONDON (ICIS)--European benzene spot prices have started to edge downward this week ahead of the monthly contract for July, which is expected to be settled on Friday 28 June, amid global bearishness and macroeconomic uncertainty, sources said on Tuesday.
Deals for June delivery were done as high as $1,360/tonne (€1,034/tonne) CIF (cost, insurance, freight) ARA (Amsterdam-Rotterdam-Antwerp) last week, but by Friday 21 June the market had come down and a deal was done at $1,345/tonne.
July was slightly backwardated, with trades done at $1,335/tonne and $1,340/tonne last week.
This week opened lower again, with June deals done at $1,315/tonne and $1,325/tonne on Monday 24 June. July offers opened at $1,330/tonne but price ideas gradually came off throughout the day. The bid/offer range this morning opened at $1,280-1,295/tonne, and a deal was soon done at $1,280/tonne.
The June European benzene contract was settled at $1,353/tonne FOB (free on board) NWE (northwest Europe), and converted to the euro price of €1,045/tonne.
The losses in Europe reflect continued weakness in both the US and Asian markets moving into July, and the gloomy outlook was supported by fears of an emerging credit crunch in China and the expectation that the US Federal Reserve is likely to scale back its stimulus programme.
Asian benzene prices saw a downward slide late last week following the US Federal Reserve’s mid-week statement of tapering off bond buying, which initiated a global market sell-off on crude oil and petrochemicals.
US prices continued to tumble on Monday 24 June, with offers down as much as $0.05/gal from the prior close with no firm buying interest. The bearishness was aided by continued weakness in US energy markets.
The consistently high spread between benzene and naphtha is also a concern among European benzene players, and with naphtha levels dropping alongside crude towards the end of the week, this could have some downward impact on the benzene market moving into July.
There are players that are seeing improved demand levels in June and into July from key end-use markets such as styrenics, which could help support July pricing, but this does not feel overtly sustainable.
While the consensus in the market is that derivative demand has picked up with the summer period in full swing, many believe that this is largely based on inventory restocking following months of subdued downstream offtake and minimal purchasing.
($1 = €0.76)
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