29 July 2013 11:17 [Source: ICIS news]
LONDON (ICIS)--Following a bearish month, European benzene spot pricing has shown signs of recovery ahead of the August monthly contract, which will be settled later this week, sources said on Monday.
After trading as low as $1,210/tonne (€908/tonne) CIF (cost, insurance & freight) ARA (Amsterdam-Rotterdam-Antwerp) on 17 July, spot values for August delivery have been steadily gaining ground, with several deals done as high as $1,270/tonne on Friday 26 July.
August spot numbers opened this morning at $1,255-1,270/tonne CIF ARA, while September was valued slightly higher at $1,260-1,275/tonne.
The July benzene contract was settled in US dollar terms at $1,274/tonne FOB (free on board) NWE (northwest Europe) and converted to the euro price of €978/tonne.
“We could see a rollover in dollars while the euro number comes down,” said one aromatics trader. “I think high styrene prices is more of a problem right now for downstream [markets].”
The influx of imported benzene into Europe this month, combined with poor offtake from key end-use markets such as phenol, has kept July spot pricing from moving up.
However, the market is in a clear contango, with August and September valued higher, while offers for the fourth quarter reached $1,300/tonne last week, although these were so far not met with any firm bids.
While the current upward trend for August is at least partially being driven by the monthly contract price negotiations this week, players have also noted several cracker shutdowns that are planned for the second half of the year and the potential for feedstock supply disruption.
Structurally, the European benzene market will continue to struggle with feedstock supply restrictions, as the adoption by cracker operators of cheaper feedstocks such as ethane and liquefied petroleum gas (LPG) leads to lower yields of pyrolysis gasoline (pygas).
($1 = €0.75)
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