LONDON (ICIS)--The European benzene spot market remained firm this week with prices holding up as significant volumes are still being shipped to the US where supply continues to be tight, players said on Friday.
As a result, at the start of the week, the European benzene contract for November was settled at €702/tonne, an increase of €31/tonne from the previous month, several players confirmed.
Limited availability has been pushing the US market higher once refinery operating rates softened in the week ended 13 October, according to data from the US Energy Information Administration (EIA).
Refinery rates were higher on the week ended 20 October, but remain below pre-Harvey levels.
Meanwhile, a fire at ExxonMobil’s Baton Rouge refinery site in Louisiana on Wednesday was not much of help to the market, although some sources saw no impact deriving from it.
September was a heavy export month for Europe and some vessels were shipped during October, while the export trend is still holding into November as long as the arbitrage window stays open.
Based on the above, most players are not surprised with the current level of domestic prices, although some of them did expect values to have started coming off by now.
The market will eventually correct itself because the current level does seem sustainable but this will be probably happening in the next couple of weeks, according to fresh estimates.
Regarding European supply, some players said that it depends on when customers need the material in November. Prompt delivery looks very tight, while some might struggle to get material even for the second half of the month.
Paying a higher price might be the key to access material more easily but nobody is currently sitting on a lot of length, according to a producer.
Other sources confirmed that finding molecules is not that easy as it used to be following the force majeure declaration at CEPSA’s Huelva unit. Some cargoes, especially from Saudi Arabia, that were supposed to arrive in the Amsterdam-Rotterdam-Antwerp (ARA) area have been diverted.
Nevertheless, a few players questioned the above pointing out that European fundamentals have not changed that drastically and that there is still plenty of material available in the region.
With regard to benzene demand, the tightness in the US is giving a strong push to European exports but also domestic volumes are holding onto a good level as recent downstream production issues are being resolved.
Manufacturing sector output growth reached its highest level since April 2011 in October, with economies in northwest Europe leading the productivity gains, analyst IHS Markit said on Thursday.
The eurozone manufacturing sector purchasing managers’ index (PMI) reached 58.5 points during the month, a 0.1 percentage point dip from flash estimates but an increase from the 58.1 points recorded in September and an 80-month high.
Commenting on that, a producer said that it was a good explanation as to why benzene, and other products, were performing solidly. Demand remains fundamentally good.
Pictured: ExxonMobil's Baton Rouge refinery and chemical complex in Texas, US
Focus article by Vasiliki Parapouli