Price and market trends: Europe benzene poised for July increase

Following a mid-month surge on spot pricing, the European benzene market is poised for an increase on the upcoming July contract settlement.

After trading as high as $880/tonne in June, spot prices cooled off slightly but still remain comfortably above $800/tonne.

July spot pricing was valued at $840-860/tonne cost, insurance and freight (CIF) Amsterdam-Rotterdam-Antwerp (ARA) on 22 June. The June Europe contract settlement was agreed at $770/tonne.

Upstream factors such as increased gasoline blending demand and steady to firm crude oil pricing were keeping some players bullish on benzene globally.

There is also a sense that benzene could also tighten with growing derivative demand from China and the Middle East in coming weeks.

One large styrene unit in the Middle East has resumed production, which is pulling on Asian benzene volumes.

European holidays

However, the approaching holiday period of July and August in Europe could limit regional demand, curtailing derivative production and demand for benzene.

“It is gasoline that is driving the benzene market right now,” said one aromatics trader. “But with the European cracker situation starting to improve and the holidays over July and August, this could limit the upside.”

Nevertheless, players in the styrene market noted that since the slump in spot pricing so far in June, the barge contract for July is poised for a sizable decrease.

Following four months of continued upward movement that has dampened offtake, a decrease in July might spur strong buying interest if consumers sense that the bottom of the pricing cycle has been reached.

The spread between benzene and styrene is still at a structurally healthy level, which could support demand for benzene in July. However, it was uncertain whether this would have a strong upward impact on benzene prices.