While several other markets have seen production cutbacks stemming from the effects of flooding, European benzene and styrene players agree that neither prices or delivery have experienced any adverse impact so far.
“Saxony and Bavaria are hit pretty badly, and they’ve even stopped supply of drinking water,” said one distribution market source.
“There were some higher FCA [free carrier] offers for styrene trucks this week, but nothing major.”
Spot styrene levels have moved up over the course of the week, despite several suppliers coming out of turnaround for June. There remains some uncertainty about what is pushing prices up, but traders largely agree it is short covering rather than any logistical problems.
With producers just starting to ramp up rates at aromatics units for June, there is still some tightness for the front end of the month, with deals done as high as $1,695/tonne (€1,288/tonne) FOB (free on board) Rotterdam and some ongoing industry appetite for spot parcels.
Meanwhile, the second half of June remains backwardated by at least $10-20/tonne, as supply is expected to improve by then.
“[The market is] backwardated at the moment but let's see, demand is stronger than it has been all year,” said one supplier.
“The number looks low versus spot, but with the slight fall in benzene it is in the right range,” said one trader following the agreement earlier this week.
European benzene spot numbers have been relatively steady during the first half of the week, with June trading within a range of $1,340-1,345/tonne CIF (cost, insurance, freight) ARA.
Bearish oil futures and macroeconomic sentiment have kept the market from making any gains, but the US market is showing some initial signs of recovery midweek following several days of losses. Offers in the European market have edged up to $1,360/tonne this afternoon.
($1 = €0.76)