Limited feedstock pygas, supply tightness lifts European benzene
London (Platts)--22Apr2015/842 am EDT/1242 GMT
Northwest European benzene spot prices have been rising over the last few weeks on reduced availability of feedstock pyrolysis gasoline which is leaving less material available for benzene production, sources said.
Rising demand and benzene exports out of the Amsterdam-Rotterdam-Antwerp region also contributed to increasing benzene prices, sources said.
"It is going both ways, demand and supply are both pushing prices up," one source said. "A third factor is that crackers started to switch over to LPG feedstocks, leaving less pygas around."
The same source also said pygas was blended into gasoline during the first quarter when low benzene prices left little incentive for conversion into benzene.
Northwest European benzene barges for delivery 5-30 days forward were assessed at a 4-month high of $886/mt CIF ARA Tuesday, up $20.50/mt on the day.
Prices have risen $166/mt or 23% from $720/mt since the beginning of the month, Platts data showed.
Current prices put the benzene spot market at a 21% or $156/mt premium over the European April contract price of $730/mt (Eur673/mt).
LPGs propane and butane primarily yield ethylene with negligible output of propylene, butadiene and pygas. Pygas is a main feedstock for benzene and other aromatics in Europe.
Both LPGs are priced at a hefty discount to traditional feedstock naphtha and are becoming a preferred feedstock for steam cracking, sources said.
Propane barges were assessed at $400/mt FOB ARA Tuesday and butane barges at $390/mt, respective discounts of 24% and 26% to the price of physical naphtha barges which were assessed $524/mt CIF NWE.
This was driven by the simultaneous end of the winter gasoline-blending and heating seasons.
An estimated 30-40,000 mt of benzene exports have moved from ARA to the US Gulf Coast this month, which also contributed to shortening supply length in the NWE region, sources said.
High cracker run rates and turnarounds at downstream styrene monomer units left ample benzene material in Europe during the first quarter.
US May benzene prices were assessed at 284 cents/gal ($849/mt) DDP USG Tuesday, up 1 cent/gal on the day.
With freight between the regions at $45-$47/mt and NWE April prices at $880/mt CIF ARA, the arbitrage to the USG is firmly closed, Platts data showed.
Market participants expect further price increases when downstream styrene monomer units come back online later in the second quarter, which would spur an uptick in benzene demand and keep the ARA-USG arbitrage closed.
Synthos is currently undergoing a turnaround at its 170,000 mt/year styrene plant in Kralupy, Czech Republic, which will last until mid-May, the company said last week.
This comes after industry sources said Trinseo's 500,000 mt/year Terneuzen styrene plant in the Netherlands went into turnaround in mid-April, which is expected to last 6-8 weeks.
Industry sources also said Total's 650,000 mt/year styrene unit in Gonfreville, France will restart in late April after the unit went offline for a scheduled turnaround at the beginning of March.
The nameplate capacity of these plants represents approximately 20% of total European styrene capacity, according to Platts data.
Styrene barge prices were assessed $1,393.50/mt FOB ARA, putting the benzene-styrene spot spread at $528/mt.