Market and product
Europe spot benzene gains ground ahead of October
Asian spot prices are hovering just below $1,200/tonne on an FOB (free on board) Korea basis this week, amid sluggish downstream demand and healthy availability following several start-ups in the region.
With US benzene trading this week at $4.18/gal – roughly equivalent to $1,255/tonne – this has kept the arbitrage window from Asia into the US slim recently, and there was talk last week among European players that some Asian sellers were looking to place material in Europe.
European benzene numbers have stayed above $1,300/tonne this week, with September and October deals done at $1,310/tonne, which has also created export opportunities from the US into Europe.
“It seems Europe is tight for prompt material,” said one source. “Other regions are well offered, so we could see a change of structure.”
The range for September was valued at $1,310-1,335/tonne this morning, as bids for the current month firmed slightly amid some supply concerns for prompt cargo.
The spot market in Europe had shown signs of weakness earlier this month, trading as low as $1,250/tonne as Asian length helped drag the global market down. However, Asian prices appear to have bottomed out now, stabilising at a low level, which has made Europe the destination of choice for any exports.
"The market in Asia rebounded a bit from the bottom," said one trader in the region earlier this week. "It is looking stable now."
But other players were uncertain of how sustainable the current bullish trend in Europe is, given that derivative markets are looking sluggish ahead of October and the fourth quarter. One styrene trader felt that benzene spot numbers were moving higher simply in the run-up to the October contract expected next week.
The European September benzene contract was agreed at $1,369/tonne FOB NWE (northwest Europe).
While feedstock supply restrictions due to the cracker turnaround season between now and November could support the benzene market into the fourth quarter, the schedule of shutdowns has been well known in advance, so players could have adequately prepared for any limitations on feedstock.
One benzene trader noted that the fourth quarter of 2013 saw an expectation of tightness in the market due to cracker turnarounds that failed to materialise.
