Market and product

European benzene spot prices have remained firm following the March contract settlement at $576/tonne (€523/tonne in euro terms), sources said on Thursday, trading above $600/tonne several times this week.

March deals were done at $605-610/tonne this week, with the bid/offer range last seen at $600-620/tonne. April was backwardated, trading at $580/tonne early in the week before a range of $590-605/tonne was heard.

March bids and offers were higher this morning alongside gains in the US market overnight, with prices reaching $2.01/gal DDP. Upward movement on crude oil so far this month was also supporting the benzene market.

The first half of the month saw a premium emerge, with a range of $625-660/tonne seen for prompt delivery. April was backwardated at $615-645/tonne.

However, some players were uncertain where the upward momentum was coming from. There are numerous scheduled derivative shutdowns on styrene and phenol, and imports arriving into the region.

“We are seeing benzene imports from India and the Middle East,” said one trader. “Even from Canada. So combined with the upcoming turnarounds on styrene, it is hard to say what is driving the numbers higher.”

Imports were marginally down over the course of 2015 compared to the previous year, but the market saw a steady increase in import volumes from 2012-2014.

The European benzene market has faced a structural shortfall on benzene due to the switch to lighter cracker feedstocks, and is increasingly reliant on imports from other regions to redress the balance.

While spot styrene levels have been pushed higher so far this month, breaching the $1,000/tonne FOB (free on board) mark for the first time since September 2015, several traders said that there has so far been no noticeable shortage of material in the European market.

The impact of the European turnarounds is expected to be more pronounced by April, which is evidenced by the contango into next month. However, March could see more buying interest as consumers look to fill up tanks before any sharp upward movement on pricing in April.

Some players in the benzene market felt that the upturn on styrene could help explain the relative strength for the feedstock benzene, but did not believe this was the key driver.

“Styrene is looking tighter,” said one benzene trader. “Maybe that supports benzene numbers, but there isn’t always a correlation. When styrene is tighter, then we see the spread widen over benzene, and that’s normal.”

There was some speculation last month that the upturn in demand from China for reformate and mixed aromatics that has supported the BTX (benzene, toluene, xylenes) chain was tightening feedstock availability for benzene production, as toluene and xylene competed for pygas.

However, both traders and industry sources this week said that they weren’t seeing any problems with pygas supply.

“The reasoning makes sense, but we don’t see pygas short on a structural basis,” said one industry source. “Many of our traditional customers can’t receive the product in March.”

Moreover, one benzene trader added it was seeing pygas move from Europe across the Atlantic, suggesting there may even be a build up in length.