Market and product

The US benzene-to-crude ratio reached a four-month high Monday at 2.49, based on Platts' data, as low Asia benzene imports softened spot benzene declines, sources said.

The ratio was last seen higher on July 27 at 2.53, Platts data showed.

US spot benzene prices fell 4 cents/gal Monday to $2.23/gal ($666.77/mt) FOB US Gulf Coast, as crude pricing fell $2.32 to $37.65/b, a level not seen since 2009.

The ratio was at 2.39 on Friday, Platts data showed. The industry accepted benzene-to-crude ratio has been around 2 this year, market sources said.
"Spot benzene price declines were softened as Asia benzene imports remained low, keeping US inventories smaller despite weak demand," a source said.

"US benzene pricing was seen at 2009 levels at $1.87/gal FOB USG on January 14, when crude pricing was in the mid-$40s/b, as benzene inventories were much larger," the source added.

Around 70,000 mt of benzene is expected to arrive from Asia in December, according to sources.

The US is net-short benzene production and typically needs around 120,000 mt or more to satisfy the deficit, market sources said.

An arbitrage has been consistently open on paper for the last month, but there has been nothing extra arriving from Asia, sources said.

The benzene-to-crude ratio is typically used by the industry to give an indication of whether or not US benzene pricing is overvalued.

Some market participants believe benzene is overvalued, but others cite low Asia imports as support for current price levels.

"There are fundamentals that support lower benzene pricing, while others support higher pricing," a trader source said.