NWE benzene's premium to naphtha spikes to six month high

08-Jan-14

Benzene's premium to naphtha in Europe rose to the highest level in the past six-and-a-half months, Platts data showed, on a combination of bearish naphtha fundamentals and lingering strength in benzene. Spot benzene price was last assessed at US$1,363/mt CIF ARA, and naphtha cargoes were assessed at US$923.50/mt Monday. As a result, benzene's premium rose to US$439.50/mt, thus almost doubling from the level seen at the end of October, when it dipped to US$219.25/mt, which was itself a one-and-a-half-year low. Benzene prices have been on a rise over the past two-and-a-half months, as European traders accelerated exports out of the region, which had been depressed by poor demand and high stocks. A number of production issues at the end of the year also contributed to further tightening in Europe. Currently, the increase in the benzene-naphtha premium stems mainly from the acute bearish pressure on the naphtha market in Europe. Naphtha spot price has dipped to its lowest level since mid-November, as demand from the petrochemical sector has not so far met expectations. Sources said expectations of January restocking failed to materialize, as many traders preferred not to de-stock at the end of the year. In addition, prices of LPG, which could be used as an alternative, though yielding less aromatics, a feedstock for steam crackers, have been curbed by mild winter temperatures, thus making propane a more attractive feedstock. At the moment propane is only $13.50/mt more expensive than naphtha, according to Platts data.