Europe benzene/naphtha spread hits 19-month high

20 January 2014 15:04  [Source: ICIS news]

LONDON (ICIS)--Record-high benzene spot pricing and bearish sentiment in the naphtha market have led to a spread of almost $600/tonne between the two products in Europe, the highest since June 2012.

The combination of a bullish US market, renewed restocking demand amid low inventories for the new year and some production problems in Europe have pushed spot benzene numbers well above $1,500/tonne this month, with a record-high spot trade done on Thursday 16 January at $1,560/tonne CIF (cost, insurance & freight) ARA (Amsterdam-Rotterdam-Antwerp).

Meanwhile, European naphtha prices dropped below $900/tonne CIF NWE (northwest Europe) last week amid softening Asian numbers. Sluggish petrochemical demand combined with poor gasoline uptake have left the European market dependent on exports to Asia so far in 2014.

January benzene spot offers remain high at $1,550/tonne CIF ARA so far this week, but buying interest is limited amid expectations that a downward correction is on the horizon.

Nevertheless, the first half of February is being offered at $1,520/tonne – in sharp contrast to any February material which is valued at $1,435-1,465/tonne – indicating that the current squeeze on benzene availability is likely to last until next month.

With a heavy cracker maintenance schedule planned for Asia from February onwards, there are concerns that the market will not be able to absorb European naphtha exports to the region.

European naphtha was valued at $906-907/tonne earlier today, while February swaps were assessed at $900-902/tonne.

“Naphtha still hasn't got out of bed this winter as propane is so cheap,” said one source in the market.

Additional reporting by Cuckoo James


By: Truong Mellor
+44 208 652 3214

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