The Northwest European benzene market tumbled to a 15-week low of $1,335.5/mt Tuesday on a combination of weak downstream demand, upcoming derivatives turnarounds, a closed arbitrage to the US, as well as persistently high inventories, Platts data showed.
The last time benzene was assessed lower -- at $1,333.50/mt CIF ARA -- was November 16.
Benzene prices have been on a downward trajectory since January, despite initial expectations that producers of derivatives would go to the market for additional volumes of benzene in order to produce and accumulate stocks ahead of their turnarounds.
The first styrene turnaround, at Shell's Moerdijk plant, is expected to start around Sunday, with the company gradually ramping down over the next few days, market sources said. This will be followed by a number of other units taken out for maintenance during the second quarter.
In other derivatives, a source from Italy's Versalis said the company's acetone and phenol units at the Mantova plant would undergo a maintenance lasting two to three weeks in April. The plant can produce up to 300,000 mt/year of phenol and 185,000 mt/year of acetone.
Ineos Phenol also has a planned maintenance outage for phenol and acetone in Antwerp, Belgium, between mid-May and mid-June.
Germany's Domo Caproleuna and France's Novapex are expected to have their annual shutdowns in the summer, market sources said, though exact dates have not yet been confirmed.
Meanwhile, the arbitrage window into the US remains closed, as styrene turnarounds there were also having an effect on benzene demand. According to market sources, if US benzene levels were to remain firm against weakening European levels, a Europe-US arbitrage window could open and the US market could be flooded with product.
At Tuesday's close, benzene was assessed at 460 cents/gallon ($1,375.40/mt) DDP US Gulf for April, leaving a $39/mt spread. According to shipping sources, the freight for 5,000 mt parcels from Rotterdam to the US Gulf is currently in the high $60s/mt.
"The arbitrage is closed because the US does not need molecules now. But when they do, there is no doubt they will come to Europe to buy," a trader said.
Despite declining prices, benzene's premium over naphtha was again over $400/mt, after tumbling to the low $360s/mt in mid-February on a combination of weak benzene and gasoline-fueled strength in naphtha.
Sources said that historically the spread between the two products was considered "healthy" when it was over $200/mt.
"Benzene is oversupplied, and I think there is still room for further downward correction, before it starts recovering," another trader said, adding that he considered the floor for the benzene-naphtha spread to be in a region of $300-350/mt.
