US prompt-month pricing rose to a 16-month high Wednesday on factors that included Asia's atypical premium over US spot benzene pricing, which had sparked some interest in the US to send benzene that way; low imports into the US and a strong derivative styrene market, sources said.
US spot benzene was assessed at $2.78/mt ($831.22/mt) FOB US Gulf Coast Wednesday, a level not seen since July 29, 2015, based on S&P Global Platts data.
"Fundamentals are definitely there to support the upward movement we're seeing," a trader-source said.
Asia benzene was assessed Wednesday at $848/mt FOB Korea, which marked a 17-month high, Platts data showed. The FOB Korea assessment was last seen higher June 24, 2015 at $850.50/mt.
This put the FOB Korea-US spread at $17/mt. Monday's spread was $36/mt. Once you added another $20-$40/mt to Monday's spread to get a reasonable import price for Asia, it was possible to work an arbitrage to that region, sources said. This is a rarity for US fundamentals as the US is typically net short in benzene production to satisfy demand and depends on Asia shipments to satisfy the deficit.
Asia shipments to the US have been low, sources said, adding this contributed to currently bullish sentiment in the market.
Additionally, derivative styrene strength was another driver of benzene pricing as this was translation for strong benzene demand, sources said.
US styrene pricing had also reached a 16-month high with Monday's assessment at 52.40 cents/lb ($1,155/mt) FOB USG, based on Platts data. Prices in that market have moved higher on production issues, tight supply and Asia demand, sources said.
