Europe BPA faces August increases with benzene

(recasts, clarifying contract settlement detail in second paragraph)

LONDON (ICIS)–Following lower numbers in July, the European bis-phenol A (BPA) market is braced for some upward movement next month in tandem with firmer benzene prices, sources said on Friday.

Current spot indications for benzene would support an increase of €60-80/tonne on the August contract settlement expected later today.

Spot numbers were comfortably above $700/tonne this week, with prices for prompt August delivery seen even higher. The July benzene settlement was agreed at $649/tonne in US dollar terms.

The current squeeze on European availability was due to several factors. Imports have been diverted to Spain and the Mediterranean region due to the Petkim cracker outage, while European production has been adversely affected by the warmer weather.

Derivative demand has also held up this month. Offtake from the styrene and cumene sectors has been strong, and while the narrowing benzene/styrene spread could lead to demand for benzene from the styrenics chain easing off, this has so far not been seen.

Any increase for European benzene next month would prove challenging for the BPA market. With higher production costs and a steady flow of Asian imports into Europe, this would put a lot of pressure on domestic BPA sales and operating margins in order to stay competitive.

“BPA is long in Europe due to imports from Asia,” said one trader. “August will be a difficult time with higher production costs.”