Recent start-ups of new benzene capacity in Asia are already changing trade flows in the Atlantic Basin, with US requirements for European material diminishing amid ample supply from Asia, sources said.
The trend is likely to keep a lid on spot prices in Europe, despite constraints on the availability of feedstock pygas resulting from ongoing light cracking, they said.
European spot prices have dropped 8% since the start of September and 16% since mid-July. The spot price of benzene in Europe was assessed at $1,279/mt CIF ARA Thursday.
However, the discussion ranges moved sharply lower Friday morning, mirroring overnight declines in the US.
A parcel for October was heard changing hands at $1,255/mt, while September tons continued to command a premium of around $5/mt, sources said.
Based on the current trade information, the price reflecting the value of benzene for a delivery 5-30 days forward would be around $1,258.50/mt, the lowest since November 19 when it was assessed at $1,252.50/mt.
Meanwhile in the US, prompt loading benzene was last assessed at 410 cents/gallon ($1,225.90/mt) FOB USG, down 12 cents/gal.
"The decline which we are witnessing now is not reflecting domestic fundamentals, but is primarily driven by the US. September is a bit longer than August in Europe, but it is not a sufficient ground for prices to drop that much," a trader said.
"I think we will see the market rebuke the trend later this month or by the end of October at the latest."
Some sources said that as Asian supplies saturate the US market, there could be a reversal of a more natural Europe-US arbitrage flow.
Furthermore, Asian producers might look more closely at Europe for direct shipments. It is likely to be India and Singapore sending benzene westwards, while Korean benzene is still likely to go primarily to the US.
In June, there was an 18,500 mt benzene parcel shipped from Korea to the EU, according to the Eurostat data. Sources said that shipment was a one-off, rather than a sign of a new trend.
