Europe spot benzene dips, players watch US
Truong Mellor
07-Sep-2016
(adds spot market commentary in seventh paragraph)
LONDON
(ICIS)–European benzene spot numbers eased slightly this
week, sources said Wednesday, but a strong US market is
likely to limit any significant drop in pricing.
After closing last week at $675-690/tonne,
September spot numbers were initially higher on 5 September
at $692-705/tonne, with the market pushing upward in tandem
with gains on crude oil futures.
“The market is following oil for now,”
said one European industry source this morning.
Crude prices were firmer
as the week opened, with the market buoyed by news Russia and
Saudi Arabia had agreed to stabilise the global oil
market.
However, the upward momentum later
reversed as the week progressed, with a stronger US dollar
weighing on the markets.
European benzene spot numbers saw some
downward movement towards the end of 6 September, with
September spot indications dipping to around the $685/tonne
mark.
September bids were slightly lower this
morning at $672/tonne, while offers were at $690/tonne. Other
sources valued the current month on either side of
$680/tonne. October was slightly backwardated at
$670-685/tonne.
However, with US Gulf prices still bullish
around the $740/tonne mark this week, some European players
feel this will limit any further downside to domestic
benzene numbers.
Transatlantic freight rates out of the ARA
region are facing downward pressure, with expectations that
5,000 tonne parcels could drop below $30/tonne this
month.
The usual arbitrage opportunities from
Europe to the US such as pygas or caustic soda have
disappeared, which has limited activity on these shipping
routes. The access to cheaper feedstock in the US means
interest for chemical exports has picked up.
A lack of Asian imports and some
production problems in the region has strengthened US benzene
prices into September, and the open arbitrage window from
Europe at current prices would see European product moving
across the Atlantic.
There was already an enquiry seen last
week to move 4,000-5,000 tonnes of benzene from Europe to the
US, with charters aiming for a shipping rate below
$30/tonne.
Additional reporting by Sarah Trinder
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