The recent collapse in the price of Northwest European spot benzene has squeezed its premium to upstream European open spec naphtha to the lowest level since mid-December, Platts data shows.
NWE spot benzene prices have fallen $57/mt since the start of the current week to close at $1,200/mt for 1,000 mt CIF ARA barges Tuesday, while naphtha has fallen by just $23.50/mt to $1,055.75/mt, cutting the premium to $144.75/mt.
According to some benzene sources, lengthening supply was playing a key role in the drop with a lack of buyers forcing sellers to offer down.
"We've had the same discussion for the past week, but now there is a recognition that there is some benzene that needs to be sold," said one producer. "It's not oversupplied as such, but more benzene has been produced than people thought."
Sluggish demand and falls in derivatives was also playing a role in the benzene fall, with styrene monomer dropping $60/mt Tuesday as a recent spike following issues at Shell's propylene oxide/styrene monomer proved short lived.
A trader said that many things had contributed to the fall in benzene.
"I think it has fallen because of its own dynamics. It was overdone. Then we have crude and styrene down too and sentiment is getting weaker. Some people were long and now they are reducing their length because everything looks negative," the trader said.
According to one source, a key change in the market could be greater availability of pyrolysis gasoline (pygas), from which benzene can be extracted.
Firming gasoline prices in Europe compared to low benzene spot levels had meant that less pygas was moving into the extraction pool according to sources.
One source said this situation had not changed and added: "At the start of last week there were plenty of buyers looking for pygas. Now we seem to have plenty. Some of those who were looking now have enough and are now selling benzene."
