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US-Europe benzene arbitrage opens on paper: trade

An overnight decline in US benzene prices has opened up a theoretical arbitrage window for deliveries into Europe, according to Platts data Tuesday.

But so far no fixtures have been heard done, as it remains unclear how sustainable this would be.

Weak demand and expectations of imports from Asia have put downward pressure on prices in the US once again after a recent rebound, and the September price was assessed by Platts at 419 cents/gallon ($1,252.81/mt) FOB USG at Monday’s close.

The European market mirrored this decline, but not in such a marked way.

Platts assessed October benzene at $1,325/mt CIF ARA Monday, and in the morning trading session Tuesday, October bids were heard at $1,290/mt against $1,305/mt offers.

US Gulf-ARA freight rates are around $60/mt for small parcels and around $43-45/mt for 5,000 mt parcels.

The European market has tightened over the past few weeks, amid ongoing turnarounds, sources said.

Benzene inventories in Europe were already low in early September as a result of a maximization of cracking light feedstocks.

However, poor downstream demand — both from the phenol and styrene sectors — had been fully offsetting this, and the market followed the US down.

The October price in Europe dipped to $1,270/mt CIF ARA on September 16, the lowest level since late November last year.

But as downstream demand comes back — with some turnarounds set to finish in the coming month — and with benzene production further pressurized amid cracker and refinery maintenance works, the European market could finally detach from the developments in the US.

– Platts.com

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