03-Oct-16 Amid weak styrene prices, the spread between benzene and styrene in Northwest Europe touched US$252/mt in the middle of last week, the lowest point since end-July, as per Platts. Benzene was assessed at US$668/mt CIF ARA Thursday, while styrene was assessed at US$920/mt FOB ARA. Some bullish movements were seen in benzene, tracking higher crude, but styrene remained in the doldrums.
Styrene price reached a fresh seven-month low mid-week as keen sell interest led to product flowing into the market. This led to a sharp US$30/mt drop in the October price, as October was traded six times at US$950/mt on Monday.
A source said on last Thursday that there was plentiful supply, adding that the length in the market was carried over from August. Issues at Styrolution's downstream polystyrene plant earlier in the month meant that styrene demand was weaker than anticipated.
In the benzene market, however, October prices have remained range bound at US$660-670/mt throughout the week. A shallow backwardation has lingered in the European spot market, as traders have hesitated to build up inventory and imports from the US have come down. Cost economics have also lent support to benzene prices, but benzene's premium to naphtha dipped below US$270/mt on Thursday. A US$250/mt spread is needed for benzene extraction to break even. The benzene-naphtha spread touched nearly US$400/mt early on in Q3.
Increased benzene imports from the Middle East to Europe have however alleviated European supply tightness. As previously been reported, 24,000 mt of Saudi Arabian-origin benzene is to discharge in Northwest Europe in the first half of October. Trader sources have said that the European market currently provides as better netback for Middle Eastern imports than Asia does. The European contract price of benzene settled on Thursday at US$670/mt, down US$30/mt from September.
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