The spread between European open-spec naphtha and benzene has been squeezed to $25.50/mt this week, the narrowest spread value since March 2009, as excessive length and weak demand globally has seen benzene prices plummet.
On Thursday, 3-30 day benzene prices closed at $930/mt for 1,000 mt CIF ARA barges, Platts data show, compared with a naphtha assessment of $904.50/mt CIF NWE. October prices were assessed at $920/mt, however, and following close of assessment Thursday there were unconfirmed reports of a trade done at $915/mt.
The weakness of the NWE benzene price compared to naphtha demonstrated the lack of demand for benzene in the ARA zone at present. "People are working hard to see where they can place physical product. There's a lot about and it does need to move out," one source said.
There was talk of product leaving ARA for the US, however, a move that should help to reduce some of the supply overhang that is currently keeping prices low.
FOB US Gulf Coast prices for November were assessed at 325 cents/gallon ($972/mt) Thursday, giving ample room to move product from ARA to the US.
Several sources said that product was already headed to the US Gulf Coast and according to sources this was the best outlet for European traders to remove length from the market.
One trader said: "If someone wants to get rid of product then they have to offer it cheap so those who are trying to move it out can do something with it."
