Houston—Spot US benzene prices surged 40 cents April 15 amid extremely limited supply for prompt delivery or loading and widespread demand from US producers of benzene derivatives.
Activity on the day represented the biggest spike yet in a bull run that has seen prompt benzene jump 35% since April 1, when the assessment closed at 325 cents/gal DDP USG, S&P Global Platts data showed.April benzene gained 10% in a single trading session to close at 440 cents/gal DDP USG, the highest prompt assessment in more than six years, according to Platts data. Prompt benzene was assessed 442 cents/gal DDP USG on Sept. 5, 2014, the data showed.
May benzene jumped nearly 12% on the day, closing at 425 cents/gal DDP USG, also marking a fresh six-year high. Forward-month benzene was assessed 429 cents/gal DDP USG on Oct. 7, 2014.
Backwardated prices have pushed the May FOB benzene price to equal that of April DDP benzene. In a market that rewards sellers with the promptest material, timing may be an even more crucial element than usual in pricing, multiple traders said.
April 15 marked the first day that physical May trades counted toward the May benzene contract price, which is based on a weighted average of trading from April 15-28. Depending on market participants' positioning, liquidity can increase dramatically during the monthly 10-day trading period.
With more than 200,000 spot benzene barrels traded on the day, one trader said, high liquidity played a role in the sharp price increase, in addition to the fundamentals of supply and demand.
Surging prices were also partially a reaction to tight benzene supply and volatility in Europe, sources said. "Europe is driving everything: benzene, styrene, MDI, cumene, and cyclohexane," one market participant said.
Traders said they expected the dramatic gains that have characterized much of the past two weeks to continue into the next session.
