LONDON (ICIS)--The European benzene spot market witnessed firmer prices this week with the upward trend largely based on increasing values in the US market as well as higher crude oil prices, players said on Friday.
Although it is difficult to judge how long this could last, European players have already started to explore if there can be any export opportunities from the region heading there as US prices are looking very attractive.
However, nothing appears to have materialised as players consider the arbitrage window not open yet.
Supply in Europe seems to be abundant, although some sources felt that the market was not as long as it was at the beginning of October.
Still, some material needs to leave the region so that the market turns more balanced again.
Meanwhile, fundamentals remain largely stable with no production restrictions, steady flow of imports and reasonable demand.
Benzene volumes are expected to move higher in the weeks to come once Spanish petrochemical producer CEPSA lifts its on-going force majeure on cumene and phenol and go back to normal production.
Even if the company sticks to its initially announced timeframe, sources in the benzene market do not expect them to be back earlier than mid-November.
Some players pointed out that CEPSA, apart from its own benzene production, sources the rest of its required volumes from Saudi Arabia, Israel, Turkey and maybe Asia.
When the FM is lifted, they might buy some spot material from European suppliers, but they will be still getting their main volumes from external sources.
Therefore, their return is not expected to make such a big difference on European benzene demand, they estimated.
Other players, however, said that the volumes destined for CEPSA - before the FM was declared - were diverted from the Mediterrenean and arrived in the Amsterdam-Rotterdam-Antwerp region releasing more material in the market.
Meanwhile, fresh supply issues in the phenol market have raised further concerns on benzene demand.
Italy’s Versalis has declared force majeure on phenol at its Mantova, Italy phenol and acetone unit, according to a company letter dated 16th October and seen by ICIS late this week.
According to the letter, due to technical problems occurred during the restarting operation at the Mantova phenol plant, Versalis has been forced to shut down the plant immediately.
There was a sudden increase in temperature in the oxidation reactors that caused some damage to catalyst and equipment, the letter said, and now these have to be replaced.
Versalis said that the phenol stock is currently empty and it has to cancel its phenol supply with immediate effect.
According to phenol market estimates, based on the new delivery schedule agreed between Versalis and some of its customers, the issue should be resolved in the next couple of days.
However, other sources expect production to be down for the next 2-3 weeks.
Benzene players were wondering how much material could be released in the market following this new FM, but it was difficult to estimate.
In other downstream markets, styrene production seems to be running with no particular issues and inventories seem back to normal levels while demand remains solid mainly driven from the European expandable polystyrene and acrylonitrile-butadiene-styrene markets.
Focus article by Vasiliki Parapouli