Regional markets at price parity again

Economic growth, Oil markets

An interesting thing has happened to benzene markets, which I haven’t seen noted elsewhere. According to ICIS pricing, average prices last week in Europe, US Gulf and Asia were $1053/t, $1052/t and $1040/t respectively.

Compare that with a year ago. Then, Europe was at $1220/t, USG at $1135/t and Asia at $1010/t. So we have gone from a 20% difference between high and low, to just 1%. This seems like a return to the historical norm, as regional differences always used to be very minor. As recently as 2 years ago, prices were again almost equivalent at $827/t, $831/t and $837/t.

Benzene is always a good product to study, because being liquid and widely traded, it often reveals underlying trends before they appear elsewhere. One therefore wonders if the return to the historical paradigm finally marks the end of the supply disruptions caused by Hurricane Katrina later in Q3 2005?

And is the fact that benzene prices have only increased by 26% since July 2005, whilst Brent crude oil prices have moved 34%, also telling us something about the growing difficulty of passing higher oil prices down the chain?

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