The Asia to Amsterdam-Rotterdam-Antwerp benzene arbitrage window is unlikely to open despite reduced supply in Northwest Europe on the back of outages at steam crackers in June, leaving European prices as the highest globally, industry sources said this week.
Tighter supply sentiments in Europe are likely to be balanced by lower run rates at downstream styrene monomer production plants, which is causing a demand slump for upstream benzene, leaving the market bearish over the coming weeks, sources said.
Despite being high globally, NWE prices are currently hovering below values needed to open an arbitrage window from Far East Asia and Southeast Asia, on paper at least.
Platts assessed NWE benzene barge values for July at $825/mt Tuesday, with August at $810/mt, putting the 5-30 days forward assessment at $823.50/mt and the daily backwardation at 0.60/mt.
Prompt Asian benzene barges stand at $738/mt FOB Korea and $730/mt FOB Southeast Asia.
With freight for 5,000 mt parcels from Far East Asia at $95/mt and from Southeast Asia at $90/mt, this puts the arbitrage levels into the ARA hub at $833/mt and $820/mt respectively, Platts data shows.
The backwardated structure of the NWE market is also making it difficult for market participants to find suitable delivery dates, due to the four to six week shipping time from Asia, one source said.
Other sources said it was more likely that Asian benzene would be shipped to the US Gulf Coast, where prices stand at 266 cents/gal ($792/mt) DDP USG, as the cheaper freight rates and shorter delivery time make the US a more attractive destination for Asian benzene.
– Platts.com
