The reported departure of commodities trader Trammo from petrochemicals trading is set to hit liquidity on products such as benzene, styrene, toluene and xylenes, market sources said Tuesday.
US-headquartered trading company Trammo plans to cease its global petrochemical trading business following a reorganizing of the company, two sources close to the company said Tuesday.
Trammo is a significant player in the petrochemical and gas markets, with its chemicals divisions accounting for more than $4 billion of revenue out of a company-wide total of $9.4 billion in 2015.
Estimated monthly spot volumes in the European benzene market this year have been heard around 20,000 mt, sources have said, with Trammo providing a considerable part of market liquidity.
"This is regrettable for the market. People are shocked," a trader said Tuesday morning, adding that liquidity in markets such as benzene and styrene would reduce in Europe, at least for some time, following Trammo's departure from the market.
The effect is also to be felt in Asia, where spot market activity is much higher compared to Europe. Trammo is estimated to have been behind 10-20% of benzene spot market activity in Asia, according to S&P Global Platts estimates.
Another trader said the development would "definitely have a lot of impact on liquidity. Trammo has a very strong presence on benzene, styrene, pygas and toluene."
The trader expected "around 20-25% reduction [in liquidity] on benzene, styrene and pygas," although Trammo has not been particularly active on toluene lately as buying interest recently has been mostly from gasoline blenders.
Similarly, Trammo was not a particularly active player on xylenes, and the impact there would therefore be minimal.
"Perhaps, the liquidity gap [benzene, styrene and pygas] will be covered by other market players in time. We will have to wait and see," the trader added.
