Market and product

Strong derivative demand and some upstream turnarounds have pushed European benzene prices higher, sources said on Friday, although the arbitrage window from the US Gulf could limit any further price gains.

Bids for April were at $685/tonne on Thursday 21 April, but were initially not met with any firm corresponding offers. The market was backwardated, with May bids at $665/tonne. The first half of May saw bids slightly firmer at $675/tonne.

By the end of the day, April was trading at $700/tonne, while deals for the first half of May were done at $682.50/tonne, $685/tonne and $687/tonne.

Bids for April were at $685/tonne this morning while offers were unchanged at $710/tonne. May was backwardated at $670-680/tonne, with the first half of the month slightly firmer at $675-695/tonne.

“Europe is net short on benzene,” said one industry player. “Demand is good, and the various cracker turnarounds are tightening supply. The gasoline blending season is also having an impact.”

Sources agreed that the European market was better prepared for the growing pull on the aromatics chain from the gasoline pool this year compared to 2015, when benzene numbers spiked over April/May as crackers switched to lighter feedstocks and gasoline demand further shortened pygas availability.

However, with premiums for toluene over Eurobob gasoline numbers holding firm around the $120-130/tonne level, there is expected to be a strong offtake from the blending sector in the run-up to summer and the driving season.

With US Gulf benzene trading around the $620/tonne mark this week, however, there is a sense that the European market may have plateaued at current levels.

Freight costs are around $50-60/tonne, making the arbitrage from the US across the Atlantic workable, although the first ships available for Europe are for mid-May arrival.