Benzene's premium to feedstock naphtha slid to its lowest in the Northwest European market since October 18, breaching the psychologically important US$400/mt mark for the first time since mid-November to be assessed at US$379.75/mt at Thursday's close, as per Platts.
Naphtha in NWE has continued to strengthen on the back of arbitrage movements out of the region to Asia and solid demand for gasoline blending, keeping supply tight. Spot CIF NWE cargoes were assessed at US$1012.25/mt Thursday, the highest since April 2012. Meanwhile benzene prices - pressured by slow downstream demand ahead of maintenance work at a number of derivatives plants, mainly styrene - have no upside in the near future, as per market players. Spot NWE benzene barges were assessed at US$1392/mt CIF ARA at Thursday's close. This is a noticeable decrease in benzene-naphtha spread from the highs seen through 2012. The spread between the two products reached a six-year record of US$631.75/mt on June 8, as production glitches and short-buying left the market lacking prompt benzene tons. A wide benzene-naphtha spread returned towards the end of 2012, pushed out by an open benzene arbitrage to the US and declines in naphtha.
However, compared to the average level in previous years, when it hovered around US$200-300/mt, the spread between benzene and naphtha prices is still in a healthy territory for benzene producers. Previously sources said that the break-even level for most producers was close to US$200/mt. Meanwhile, the spread between styrene and benzene remains on an upward trend, with styrene assessed at a US$330.50/mt premium at Thursday's close. This is a significant rise compared to December, when it several times sank below US$100/mt.