Europe benzene bullishness holds so far in December

LONDON (ICIS)–A combination of domestic production problems and strong pull for material from the US has helped support European benzene pricing into December, sources said on Tuesday.

After settling for December on Friday 9 November at $1,301/tonne (converted to €957/tonne using the agreed upon exchange rate) FOB (free on board) NWE (northwest Europe), a triple digit increase in what has traditionally been a slow month in terms of demand, European spot prices continued to gain ground last week, with trades for December delivery reported as high as $1,375/tonne.

The market has been quiet this week, although offers for the current month have held steady at $1,375-1,380/tonne CIF (cost, insurance and freight) ARA (Amsterdam-Rotterdam-Antwerp) so far despite some losses in the US and Asian markets, and offers on a FOB basis moved as high as $1,400/tonne on Monday 9 December.

While activity in the US market has been limited so far this month due to the Thanksgiving holiday period, the ongoing constraints on availability in the region in the aftermath of the fire at Chevron’s Pascagoula refinery in Mississippi was keeping upward pressure on pricing.

Combined with an additional turnaround in the US Gulf region and fewer Asian imports due to limited arbitrage opportunities, there is still strong appetite for European cargo.

“The issues there are not yet resolved,” said one European trader.

Continued feedstock supply concerns amid several European cracker restarts have boosted prompt pricing, and there are several aromatics units facing technical problems, with one NWE reformer unit expected to remain down until mid-January.

Another trader commented that it was seeing full order books well into January, adding that cumene operating rates were also rising from 60% to somewhere around 75%, which was also supporting a healthier demand outlook.

However, the trader cautioned that high benzene pricing is always a threat to derivative demand, and felt that the market would shy away from continued gains on spot pricing.

“There is nothing more bearish than high pricing,” the trader said, adding that it believed that $1,400/tonne was the current ceiling on the European market. “High prices always kill demand.”