19 February 2014 10:33 [Source: ICIS news]
LONDON (ICIS)--Softening prices in both the US and Europe combined with continued downstream weakness are weighing down on the European benzene market, sources said on Wednesday.
Following a bullish January that saw spot benzene levels hit record highs of $1,560/tonne, European prices have been on a gradual decline so far this month.
Midweek saw February valued at $1,360-1,380/tonne CIF (cost, insurance & freight) ARA (Amsterdam-Rotterdam-Antwerp), while March remained backwardated at $1,330-1,350/tonne.
This downward movement in Europe was mirroring developments in the US market, where the arrival of imports has helped ease some of the supply constraints seen earlier in the year.
Asian benzene prices have also seen some erosion in February, with downstream styrene bearishness and limited import demand from the Chinese market keeping the overall mood in the region sombre.
Following several outages in Europe earlier in the year, benzene production appears to be picking up since the second half of January, aided no doubt by a healthy spread over naphtha supporting refinery economics.
However, several players were unclear whether the current downward trend on benzene would last.
“There are no fundamentals behind the current low numbers,” said one trader. “It could be that the bottom has been reached for now, and the market moves back above $1,400/tonne.”
While there are bearish macroeconomic signals for China and the US, some aromatics players noted that this was counterbalanced by positive signs in several European countries, with GDP growth in both France and Italy in Q4 2013 and some estimates that German GDP growth will reach 1.8% this year.
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