The European spot price of benzene edged above the contract price Tuesday for the first time this month after benzene consumers in Europe took advantage of the discount the benzene spot markets had offered against the contract price, sources said.
The European spot price of benzene was assessed at $725.50/mt CIF ARA Tuesday, $2.50/mt above the contract price of $723/mt.
The August contract price rose $74/mt from July, as severe tightness in the spot market caused buyers to scramble for spot parcels. In the two business days following the settlement, however, the spot price dipped to $676.50/mt CIF ARA, equivalent to a 6.4% discount to the $723/mt contract price.
On Wednesday morning it was also reported that an August parcel had traded at $730/mt late Tuesday.
Fundamentals did, however, change in August from July, sources said, and the spot market has simply caught up with the contract market.
"Consumers are just playing it safe and have been buying in the spot market while it is at a discount to the contract price," one trader said, adding that market fundamentals remained tight. "Buyers are just realizing that there's not much around and are picking up [available] volumes."
Unplanned cracker outages have also played a part in the firmness in the spot market.
The Naphtachimie stream cracker in Lavera, southern France, is running at a limited rate, a source close to the company said Monday. Also, a planned maintenance shutdown of one of BPRP's two crackers at Gelsenkirchen, Germany, will begin mid-August. Additionally, maintenance at Ineos' Grangemouth cracker in Scotland is expected to continue for another two weeks, a source close to the company said this week.
"Cracker outages also play a part," said a second trader, noting that strong benzene demand was the main driver. "Demand is good; apart from cyclohexane, downstream demand is robust, everything is running strong."
