Europe spot benzene continues to drop in quiet market

13 May 2014 14:26 Source:ICIS News

LONDON (ICIS)--Improved regional availability is continuing to weigh down on European benzene pricing, sources said on Tuesday, with spot levels dropping to their lowest since the start of the year.

May bids and offers have steadied themselves around the $1,360/tonne CIF (cost, insurance and freight) ARA (Amsterdam-Rotterdam-Antwerp) mark this week, although trading activity has been limited owing to the Asia Petrochemical Industry Conference (APIC) from 15-16 May.

This is down by more than $50/tonne from the start of last week, when prompt May deals were still being done as high as $1,430/tonne on a free on board (FOB) basis.

The key downward pressure is coming from a raft of imports into Europe from both the US and Asia for May, with some players estimating up to 40,000 tonnes already having been fixed for delivery this month.

Following the settlement of the May US contract at $4.57/gal FOB, this opened the arbitrage window from the region into Europe. There was also talk that one supplier was bringing in close to 20,000 of pyrolysis gasoline (pygas) for extraction purposes, adding further downward pressure on the domestic benzene market.

Additionally, there was talk that 10,000 tonnes of material from South Korea that had previously been headed for the US Gulf region is now being diverted to Europe in order to capitalise on the recent bullishness.

However, European sources disputed this, noting that the recent drop in European prices has made the US a more attractive destination for exports. With one unit in Indonesia down, a trader said there were likely to be imports of up to 10,000 tonnes from Thailand but little else ARA-bound from the region.

Other sources agreed, adding that the current downward trend in Europe could be counterbalanced by improved demand from key downstream sectors such as the phenolic and styrenic chains as June and the summer season draws closer.

But with limited liquidity in the current market, many are expecting benzene to see sustained downward pressure and a considerable drop in the upcoming monthly contract price from the May level of $1,449/tonne, markedly high in retrospect.

“There are some production issues in southern Europe and the Med region, but the volume of imports is more than enough to offset this,” said one benzene trader.

Europe benzene spot

By Truong Mellor