Weakness in global benzene markets has seen the premium in Northwest European over naphtha hit a six-month low, Platts data showed, with values falling below a break-even marker.
NWE benzene spot barges for delivery 5-30 days forward were assessed at $570.50/mt CIF ARA Thursday, while naphtha barge values were assessed $422.75/mt CIF NWE.
The $147.75/mt premium — a measure of production margins — was 41% lower than the typical break-even point of $250/mt needed to cover production costs.
“Benzene is bearish. The spread from naphtha is in negative territory and looks to stay so as long as prices in other regions continue lower,” a consumer source said.
Asian benzene prices were down 22% month on month to an assessment of $577/mt FOB Korea, while US benzene values lost 21% over the same period to be assessed at 206 cents/gal ($616/mt) FOB USG Thursday.
Market participants also attributed the downward trend in the Northwest European benzene market to Trinseo’s scheduled maintenance during September at its styrene monomer unit in Bohlen, Germany, which is leaving a demand gap for upstream benzene.
The Bohlen facility has a nameplate capacity of 300,000 mt/year, about 5% of total styrene capacity in Europe, according to Platts data.
Looking ahead, another source said the downward trend in European benzene would likely continue on the back reduced demand for gasoline blending going into the fourth quarter — blenders typically switch to winter gasoline specifications at the beginning of October.
Winter-spec gasoline has a higher Reid Vapor Pressure (RVP) than summer-spec gasoline, providing blenders with a larger pool of components to choose from, such as low-cost butane which has a high RVP.
That was expected to absorb less volumes of pyrolysis gasoline, leaving more feedstock material for benzene conversion, adding additional supply to an already bearish market.
Pygas is used as a feedstock for extraction of aromatics, but can also be blended into gasoline to improve the octane rating.
