US January cumene settles higher on benzene increase

HOUSTON (ICIS)–The US cumene contract has settled up by 4 cents/lb ($88/tonne) for January, in line with the January benzene increase, sources confirmed on Friday.

The increase took the price to a new range of 70-71 cents/lb, as assessed by ICIS.

The January benzene contract had earlier settled at $4.84/gal, gaining an average of 35.50 cents/gal from December on tight supply. The higher settlement, which was in line with market expectations, was the second consecutive increase for the US benzene contract.

However, the long supply/soft-demand scenario in the cumene market continued, and a source said this week that dismal derivative phenol demand in the US will continue for the very near term at least.

The January phenol contract range has not yet settled, pending consensus on the outcome of first-of-year contract talks in which the delta, or adder, between benzene and phenol is determined.

Beyond that, January phenol contracts are being pressured up on higher January benzene contracts despite continued soft phenol demand and oversupply even with operating rates still at 65-70%.

Producers also have been seeking higher margins in the co-product acetone market because of phenol’s continued poor economics.

Among feedstock, US benzene spot prices have been down slightly this week, and the February benzene contract settled up on short-cover positions.

Propylene spot prices have been largely steady as demand is facing possible downward pressure if prices get too high, especially in the downstream polypropylene (PP) market, sources said. February propylene contracts were initially nominated up by 1 cent/lb.

Major US cumene producers include Citgo, Flint Hills Resources, Axiall, Marathon, Philadelphia Energy Solutions and Shell Chemical.