Spot Northwest European benzene prices were holding their value Tuesday afternoon, despite a softer energy complex, as the market was being supported by firm US Gulf Coast values bringing arbitrage opportunities, sources said.
Throughout Tuesday morning, sources reported the July market at a range of $1,115-1,130/mt for 1,000 mt CIF ARA barges, while August remained at $1,130-1,140/mt. This compared to closing assessments Monday of $1,120.50/mt for July and $1,140/mt for August.
The stability came against a fall of more than $1/barrel in ICE August Brent, which was also at its weakest during the morning session. One source said it showed that benzene was a "crazy market...[prices] should be lower."
Other sources believed that the European market was being supported by the US Gulf Coast, which closed Tuesday at 389 cents/gallon ($1,163/mt) for July and 391 cents/gal ($1,169/mt) for August.
Freight between ARA and the US Gulf was judged to be between $40-45/mt, suggesting that an arbitrage to the US could be possible based on bid levels.
"It feels like the US is providing a floor [for European prices]," one trader said.
"It looks like the arb is open and that could be why European prices are holding," an industry source said. "You're always going to have a base level and Europe shouldn't go lower than the arbitrage to the US."
One source said that traders would be looking at exporting to the US although he noted that there was "nothing fixed" yet.
But a trader was more cautious and was concerned about whether the current US price levels would be maintained.
The US market rose by 3 cents/gal Monday, although sources struggled to explain the reason for the strength in a market they described as "balanced-to-long."
"Why is the US up? There is plenty of supply globally and they will get flooded with benzene, just like Europe did in March and April," a European trader said. "Asia and Europe are already trying to get rid of excessive length and worldwide demand is low."
