US spot benzene softens with declining crude

05 May 2017 23:00 Source:ICIS News

HOUSTON (ICIS)--US spot benzene prices firmed for most of the week ended 5 May, but lost momentum near the end of the week to close nearly flat from the previous Friday. Sources pointed to a late-week slump in crude oil prices along with softening Asian benzene markets as the main factors weighing down the market.

The arbitrage window between Asia and the US re-opened this week in a response to significant downward movement in Asian benzene prices. The arbitrage window between Asia and the US has been closed since November 2016, resulting in a steep loss in South Korean benzene imports into the US.

The US benzene market saw some liquidity on the week, with several confirmed deals seen for both the current month and the forward month. Sources said that styrene producers were actively seeking out benzene cargoes this week as several US styrene producers have recently resumed operations following turnarounds in the first quarter.

However, the downstream styrene market was marked by a lack of liquidity this week, with no confirmed deals heard.  Participants pointed to lacklustre demand for US styrene exports along with fuller production as the main factors weighing down on spot styrene pricing.

The spread between spot benzene and spot styrene prices narrowed to 11.02 cents/lb on the week ended 5 May, the narrowest spread between the two products seen in eight months.

The contango for US benzene was mostly flat on the week, with prices for May and June cargoes trading close to par for most of the week.

US benzene was assessed on Friday at $2.61-2.65/ gal DDP (delivered, duty paid), compared to $2.62/gal DDP at last week's close.

Major US benzene producers include ExxonMobil, Flint Hills Resources, LyondellBasell, Marathon Petroleum, Shell and Phillips 66.

By Zachary Moore