Europe benzene spot at fresh 2019-high, near 13% rise in August so far

LONDON (ICIS)–European benzene spot prices have reached a fresh 2019-high as bids rose to $840/tonne on Wednesday around midday, in a market that is almost devoid of offers.

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A notional offer level at $850/tonne brings the midpoint to $845/tonne, the highest price in 10 months, in line with levels in October 2018.

Forward-month pricing is bullish, but remains backwardated with a premium on volume for the first 10 days of September versus the first half of the month; and firmer values in H1 September compared with any September.

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At noon on Wednesday, bids were at $830/tonne for 1-10 September, at $820/tonne for the first half of September, and at $810-15/tonne for any September.

There were few to no corresponding offers for August or September, but an unconfirmed deal was done at $810/tonne for next month.

October was valued at $740-770/tonne.

Prices have increased on tight supply because of reduced run rates, delayed restarts, industry buying and fewer imports.

There is not much buffer stock, as traders largely do not have inventory in tanks that can cater for the prompt market, particularly in a backwardated market.

In the past year or two it has only taken a relatively small amount of extra demand to tip the supply balance.

The pull on supply has had a knock-on effect into September; though still backwardated, prices for the forward month have also increased sharply since the start of August.

The increase in benzene further narrows the gap with derivative styrene prices.

There were no deals visible last week for the current month. Offers had mostly evaporated, or they were short-lived or P&C.

Europe is now the highest priced region globally.

Values as at 16 August 2019

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Benzene prices are on a cost, insurance, freight (CIF) Amsterdam-Rotterdam-Antwerp (ARA) basis.

Benzene is used to produce a number of intermediates that are used to create polymers, solvents and detergents.

Focus article by Helena Strathearn

Front page image: Shutterstock