US April cumene contract settles lower on benzene

HOUSTON (ICIS)–The US April cumene contract has settled lower by 2 cents/lb ($44/tonne), in line with the April benzene decrease, sources confirmed on Monday.

The April benzene contract previously fell by 15 cents/gal, settling at $4.80/gal from $4.95/gal in March. That decline echoed March slippage of 14 cents/gal from February’s benzene contract.

The decrease brought the April cumene price to a new range of 68-69 cents/lb, as assessed by ICIS.

Near-term supply of cumene is anticipated longer as derivative phenol planned maintenance gets under way this month and throughout May.

Although supply of cumene has not been reported snug, some sources suggested that higher phenol production rates ahead of turnarounds and on lower March and April benzene contract costs lengthened phenol supply and heightened inquiries from buyers.

After the turnarounds, however, phenol production rates are expected to return to average rates of 60-70%, unless pent-up demand from housing and other construction surfaces soon.

However, US homebuilders remained largely uncertain about the nation’s housing sector in April, a key survey recently indicated. Builders cited concerns about ongoing tight credit conditions that hamper both contractors and potential home buyers.

In its monthly survey of housing contractors, the National Association of Home Builders (NAHB) said its housing market index (HMI) for April inched up to 47 from the downwardly revised 46 reading for March, but repeated for the third straight month a story of low expectations among builders.

The April reading indicates more builders see the market as poor rather than good because of headwinds that also including shortages of skilled labour and a scarcity of reasonably priced development land.

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