Post BASF Explosion- Spot Styrene Prices Surge To 15 Week High, Benzene Bearish

Post BASF explosion- spot Styrene prices surge to 15 week high, benzene bearish

21-Oct-16

The European styrene spot price surged to its highest level in 15 weeks on Wednesday, while benzene prices declined in reaction to the BASF explosion on Monday, as per Platts. Styrene spot price was assessed at US$1,019.50/mt FOB ARA Wednesday, soaring to its highest level since early July, as BASF shut its styrene monomer unit on Wednesday. European spot price of benzene was assessed at US$657.50/mt CIF ARA, putting the benzene-styrene spread at $362/mt -- its widest since July 5 this year.
European benzene prices have moved in the opposite direction to crude oil futures this week, as well as Asian and US benzene prices. The FOB Korea benzene marker has moved up US$4/mt this week and was assessed at US$639/mt on Wednesday, while US M2 prices have moved up US$17.94/mt so far this week to be assessed at $678.73/mt DDP USG.

The 550,000 mt/year styrene unit at BASF's Ludwigshafen, Germany, site was closed Wednesday, a source from the company said. The styrene unit is on "hot standby," which means that output has stopped, but it is in a position to restart as soon as the upstream units begin production. BASF declared force majeure on purchases of ethylene, propylene and naphtha for the Ludwigshafen complex on Wednesday. Although the company said Thursday that it would restart its steam crackers in the next few days, the production restart for styrene monomer has not been announced. Although all other styrene monomer units are running, the latest developments have supported a sharp rise in the price as market uncertainty prevailed.
The benzene market is however clouded by a more bearish sentiment, as lower styrene production at Ludwigshafen would mean that some benzene volumes could find their way into the spot market, sources have said. Assuming full run rates at BASF's styrene plant in Ludwigshafen, around 36,000 mt/month of benzene is required as feedstock.
Besides the styrene outage at BASF, other factors that have been supportive to benzene prices this month have lost steam.

The mixed aromatics arbitrage from Europe to Asia gained much interest for most of October. But as the US gasoline market took a bullish turn at the beginning of the week, European gasoline cracks rose, yielding the mixed aromatics and reformate arbitrage from Europe to Asia barely workable, sources said. Slugs of benzene feedstock pyrolysis gasoline had found a home in those export cargoes earlier in the month, meaning that less pygas was used for benzene extraction.
As the mixed aromatics arbitrage to Asia has become unattractive, benzene extraction could increase again, yielding more available volumes in Europe.