Northwest European spot benzene prices have spiked by around $40/mt Thursday morning, as a raft of exports to the US Gulf Coast has seen European balances tighten, according to market sources.
Despite a softening in the energy complex, the NWE benzene market has pushed upwards through the morning, with October bids beginning the day at $1,320/mt for 1,000 mt CIF ARA barges against offers of $1,350/mt.
By midday, bid levels had spiked to $1,350/mt, with sellers stepping back from the market.
According to one trader, the spike was caused by the market reacting to "the tightness caused by exports."
The trader added that shipping fixtures point to at least 25,000 mt of benzene leaving the ARA region for the US Gulf Coast, with "rumors of another 15kt" to follow.
Several traders have been seen in the market looking to ship small to mid-sized parcels of benzene to the USGC where tight supplies and delays on Asian imports have seen prices spike.
Platts data shows that prompt USGC price levels Tuesday reached 485 cents/gal ($1,450/mt) FOB, while values for November DDP cargoes had previously encouraged traders to ship from ARA.
This has now spread to Europe as buyers step back into the market to cover short positions, according to sources, and with November DDP valued at 465 cts/gal ($1,390/mt) by one source, the arbitrage between October ARA and November USGC appeared close.
The perceived tightness for prompt ARA tonnes was also emphasized by the appearance of a first half November market Thursday, with one source noting that H1 November was "bid $5-10/mt above any-November."
The any-November market was seen at a bid-offer range of $1,330-1,360/mt around midday.
Despite the rise in price, there were no reported deals done during the market and some sources felt that while supply balances may be tightening there was little demand for benzene in NWE.
"Trading activity is thin and the US is driving everything," a benzene consumer said. "The whole demand picture here is more than low. Most European consumers are laid back. I'm not sure yet on availability for November, but I don't perceive any supply issues."
This view was supported by a trader who said: "I would have expected more calls from consumers, but I've only had one or two calls about prompt for 1 kt each. I don't see any demand."
A second trader felt that the market would follow "the same pattern as September and May" however, where low levels of demand were countered by tight prompt supply, which lead to price spikes in NWE benzene. With inventories still being run at low levels, the trader felt that prices would likely react to even minimal buy interest.
"I don't see a need to buy in Europe, all the demand has been for exports, but you don't need much demand," the trader said. "In a thin market, you drive up the market when you need some prompt barrels."
