European benzene's premium to naphtha has topped the $450/mt mark for the first time since the start of February, as naphtha languishes at multi-month lows and benzene rises despite seemingly weak fundamentals.
The benzene-naphtha spread was assessed by Platts at $459.25/mt at Tuesday's close, the highest level since February 4.
European naphtha prices have recently come under pressure, hovering around an eight-month low. Spot barges were assessed at $844.25/mt CIF Amsterdam-Rotterdam-Antwerp at Tuesday's close.
Sources attributed the naphtha market weakness in part to falling crude prices, ongoing and upcoming cracker turnarounds, substitution of naphtha with lighter and cheaper feedstocks, and a reduction of cracker run rates on sustained weakness in the polyolefins chain.
Spot benzene has risen by 5.9% so far in April to be assessed at $1,303.50/mt CIF ARA Tuesday.
Following the settlement of April contract prices in all regions, benzene in Europe began an upward trajectory, mirroring firmer sentiment in the US.
LyondellBasell's styrene unit in Texas is expected to restart sometime in April, sources have said, while Americas Styrenics finished a styrene turnaround in Louisiana back in March.
Currently, though, market sources don't feel that the US market is experiencing tight supply yet, as improved refiner utilization rates in recent weeks mean any increase in demand will likely be covered by local producers.
In the US, benzene was last assessed Tuesday at 455 cents/gallon ($1,360.50/mt) DDP USG for May dates. With the Europe-US spread seemingly sufficient to cover the freight, some European traders were already making inquiries, a trader said.
European fundamentals still look weak, most sources said, with the benzene derivatives turnaround season far from finished.
Some traders though were already taking on a bullish tone, saying availability has fallen in recent weeks, with crackers slashing run rates to 76-80%, as well as partial substitution of naphtha with propane, which has a lower aromatics yield, and leaner inventories after fixtures to the US in March.
