US benzene exports to Europe could balance Gulf supply
23 July 2010 20:44 [Source: ICIS news]
HOUSTON (ICIS news)--Up to 20,000 tonnes of US Gulf benzene is headed to the European market in response to production issues, sources said on Friday, potentially evening out the length in the US that has suppressed prices this month.
An outage at a major European production facility opened the arbitrage opportunity in the Atlantic basin and jolted prices upward in both regions on 21 July.
"That's an easy prey for the trade," a US source said, referring to traders looking to capitalise on volatility.
A source said that 15,000-20,000 tonnes of benzene fixtures were secured for the European market.
Other US market players generally agreed with the amount of exports, although sources in Europe had estimated up to 30,000 tonnes might be coming into the market.
Meanwhile, a US Gulf aromatics trader said that 15,000-20,000 tonnes seemed like a large amount and could include some styrene.
News that Dow Chemical's benzene output at Terneuzen in the Netherlands could be shut down prompted a 4-cent jump in July spot benzene prices in the US on Wednesday.
The Dow plant, which has a capacity of 915,000 tonnes/year of benzene and 500,000 tonnes of styrene, will have its aromatics unit down for three weeks, the company confirmed.
A source said export volumes out of the US Gulf could provide "a little bit of breathing room" amid full inventories, since Asian imports came into the region last month.
However, a source said that more benzene imports were scheduled to arrive in the US Gulf for late July and early August. Four vessels were fixed with only one without a buyer, the source said.
Material was heard to be coming not only from Asia but from the Middle East and South America, according to the source.
The benzene overhang had kept spot prices mired in a range in the high-$2.60s/gal for most of the month, which is more than 10 cents under the US July contract.
More material coming would suggest further downward pressure, but a source said with the exiting exports, supply in the market could come into balance next month.
"By pulling some stuff out to go to Europe, it might make some room for everything else where there might not have been room before," a US source said.
August spot prices in the Gulf remained at a 2-4 cent/gal contango to July values, which were up and straddling $2.70/gal on energy gains and worries about Tropical Storm Bonnie.
Spot levels were talked steady on Friday at $2.68-2.72/gal FOB (free on board) July, as players remained tentative in making moves with inventory, storm and pricing uncertainty abundant.
Major US benzene producers include BP, ExxonMobil, Flint Hills Resources, LyondellBasell, Shell, Sunoco and Total.
Additional reporting by Truong Mellor
For more on Dow's Terneuzen plant, visit ICIS plants and projects
For more on benzene visit ICIS chemical intelligence
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quoted from ICIS news.
