Northwest European benzene prices have collapsed by $75/mt or 11% week-on-week to $590/mt Tuesday, Platts data show, as an increasingly bearish global benzene market is causing a downward trend in NWE prices.
"It's down to what's going on in the US and Asia -- both are causing the bearishness here [in Europe]," a trade source said. "Europe is simply tracking global prices," he added.
With 1.92 million mt/year of Asia's 19.6 million mt/year downstream styrene monomer production capacity affected by maintenances over February-May in Japan, Taiwan and South Korea, this is leaving vast volumes of feedstock benzene available for export.
As a result, large volumes of material are being shipped out of Asia, sending global prices spiralling down, particularly in the US which will receive an estimated 200,000 mt of Asian benzene in January and another 200,000 mt in February.
While smaller import volumes are expected to go to the Amsterdam-Rotterdam-Antwerp hub, one source expected increased flows of benzene into Europe later in the first quarter as the US typically needs about 120,000-150,000 mt/month of imports to stay balanced.
This is leaving NWE supply fundamentals increasingly bearish in the coming weeks as sources doubt the US would be able to absorb such quantities, leaving Europe a possible destination for both Asian and US cargoes.
Asian prices have fallen $51/mt week-on-week to $539/mt FOB Korea Tuesday, while US prices dropped 24 cents ($72/mt) week-on-week to 182 cents/gal ($544/mt )FOB USG Tuesday.
Looking ahead, other market participants expected Asian supply to be a main driver of benzene prices globally and this to outweigh the impact of a restart at Ellba's POSM-2 unit in Moerdijk, the Netherlands which is expected to provide an uptick for NWE benzene in the coming weeks.
The Ellba unit is expected to come back online this month after going offline in June 2014 following an explosion at the site and could provide a demand uptick of up to 37,620 mt/month for feedstock benzene, according to Platts calculations.
