LONDON (ICIS)--Weakening oil and energy prices and slow derivative demand are weighing down on the European benzene market so far this month, sources said on Wednesday.
After the January contract settlement at $693/tonne in US dollar terms agreed late December, spot values have subsequently moved lower over the course of the month, with the bearishness on crude oil proving to be the key factor.
After trading several times on Monday 12 January at $595/tonne CIF (cost, insurance and freight) ARA (Amsterdam-Rotterdam-Antwerp), January spot prices eased off as the week progressed, with a deal done at $570/tonne on Tuesday 13 January. February was slightly firmer, trading at $575/tonne.
“Sometimes oil and naphtha only have a limited impact on benzene, while at other times it is the key driver,” said one consumer. “Right now, there is no clear trend on benzene.”
Midweek saw prices discussions move as low as $560-570/tonne before the market rebounded slightly, although players were uncertain how long any upturn on spot pricing would last.
January spot levels opened this morning at $590-610/tonne, while February was flat with the current month.
With the drop in crude oil and energy numbers supporting improved cracker margins this month, sources also noted that this has driven up the availability of benzene feedstock pyrolysis gasoline (pygas), adding downward pressure to the market.
Downstream demand in key markets such as styrene has also proven sluggish so far in 2015, despite some signs of inventory restocking following the holiday period.
“It is winter, so it is not the season for styrene,” said one industry source, adding that the market could pick up in February/March as the traditional peak demand for construction draws closer.
Phenol offtake was described as stable, with availability also supported by the lifting of a force majeure on phenol and acetone in southern Europe earlier this month.
Additionally, players felt there was some hesitation among consumers in the market this month, with the prospect of further upstream price losses keeping many on the sidelines in anticipation of lower prices as the first quarter unfolds.
Rhian O’Connor contributed to this story