While the US market posted a slight recovery towards the end of last week, one North American source described the gains as “trivial”.
The source cited caution among some players following a sell-off in the Asian benzene market, where values dropped by as much as $40/tonne (€31/tonne) on Friday, 8 March.
“The US benzene market is still weak,” said one European trader, adding that lower derivative demand was a key contributing factor to the recent fall in domestic pricing.
European styrene numbers also saw some erosion towards the end of last week, with players looking to move material amid slower than expected construction demand and the arrival of imports into the ARA (Amsterdam-Rotterdam-Antwerp) region.
However, the market appears to have bounced back this morning, with talk of one major player looking to secure material.
Additionally, there is a growing sense that the feedstock restrictions which have plagued the benzene market since early 2012 are starting to ease, at least in the short term.
“It looks like there is more pygas [pyrolysis gasoline] being produced,” said one source, but it added it was also hearing contradictory reports of more propane being used in the steam cracking process.
After deals for March delivery were done as high as $1,380/tonne CIF (cost, insurance and freight) ARA early last week, the market gradually lost ground ahead of the European Petrochemical Luncheon on Thursday, 7 March.
Several sources noted that sentiment among benzene players at the event was markedly bearish.
“It has been a funny three months on benzene since Christmas,” said one market source. “There has been lots of liquidity and volatility, but nobody has been really making any money.”
By Friday, 8 March, current month values had dropped to $1,265-1,290/tonne CIF ARA, before deals were done at $1,265/tonne and $1,275/tonne.
The March contract price was settled at $1,380/tonne FOB (free on board) NWE (northwest Europe) in US dollar terms, and converted to the euro equivalent of €1,054/tonne.
Despite the current weakness, several players believe European pricing will not fall much further.
One trader said it saw $1,230/tonne as the current floor for the market, adding that current price levels for benzene are still historically high.
“I don’t see it moving much lower than where it is now, unless naphtha tanks,” the trader said.
($1 = €0.77)