LONDON (ICIS)--Falling global prices and speculation among some players saw European benzene numbers start to fall this week, sources said on Thursday, with many in the market apprehensive ahead of the scheduled styrene turnarounds in March and April.
Prices in the US Gulf region fell on Wednesday February 13, as participants kept to the sidelines, unsure of where Asia would open following the extended Lunar New Year holiday period.
“The market is starting to reverse direction here,” one source in the US said. “Bids are getting a bit flaky.”
The Asian market saw some erosion on Thursday of up to $20/tonne when some players returned, amid expectation that supply for second-half March loading will lengthen. Additionally, the absence of Chinese participants because of the ongoing holidays weighed on buying interest.
This growing bearishness was felt in Europe, where February prices started to slip towards the end of Wednesday. Following deals as high as $1,418/tonne (€1,049/tonne), offers moved down as the day progressed and February parcels were traded as low as $1,400/tonne by the afternoon.
“Industry was aggressively selling,” said one trader. “There was something behind it, though it is difficult to say what that is. There is no real change on pygas or the US shale gas situation.”
With lower US and Asian benzene numbers, one source said that there was currently some speculation in the market about where Europe may eventually settle. With naphtha currently around the $1,000/tonne level, the source felt that $1,350/tonne would be a reasonable number.
“Structurally, the price of benzene is still high,” the source added.
The weaker benzene numbers in Europe have seen some impact on the downstream styrene market, where offers came down to $1,720/tonne FOB (free on board) Rotterdam this morning, while buyers kept to the sidelines in anticipation of further erosion.
Nevertheless, the forward sentiment for March and April remains strong, with March valued at $1,740-1,760/tonne and April higher still at $1,750-1,765/tonne, with availability the key concern over the turnaround period.
“Players are eyeing up March,” said one source from the styrene distribution market. “There’s not enough liquidity in the market to finance a lot of purchasing, and storage is also an issue, forcing people to sell.”
While the upcoming turnarounds on styrene will see domestic benzene players look to fix vessels to the US in order to help keep the market balanced, the US market is already amply supplied.
“There is a lot of concern about the extra [benzene] supply from the styrene turnarounds both in Europe and elsewhere,” said a US source. “That’s why benzene hasn’t gone back up to the $5/gallon level.”
($1 = €0.74)