Global benzene prices converge in 4Q

: Petrochemicals
14/11/06

Global arbitrages for benzene narrowed in the fourth quarter as prices in every region converged amid steep declines in WTI, which weakened from $90/bl levels to below $80/bl.

US fob benzene prices fell $154/t since October 1, from $1,260/t to $1,106/t as of November 5.

In Europe, prices tumbled $217.50/t in the same time frame to $1,090/t cif ARA, while Asian prices sank $135.5/t to $1,048/t fob Korea.

Despite the narrower arbs for benzene, cargoes from Asia continue to make their way to the US, and US barrels continue to be fixed to Europe. European buyers tend to favor the US arbitrage in the fourth quarter rather than risk the longer delivery time to secure volumes from Asia.

In the US, benzene availability remains somewhat long, with American Fuel & Petrochemical Manufacturers (AFPM) reporting a 3.2pc increase in third quarter benzene production at 423.2mn gallons. However, year-to-date production is 6.8pc lower from 2013 at 1.18bn gallons, according to AFPM's production report released 31 October. US benzene inventories are 7.7pc lower than last year at 89.9mn gallons; however they rose by 156,000 gallons from the second quarter of this year.

With ample supplies and steady exports, US market participants showed greater interest in outer-month volumes, and this week discussions for first quarter benzene suggested a slight premium to current month parcels.

nj/as

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