Outlook: US benzene prices to start 2015 low
24 Dec 2014, 4.03 pm GMT
Houston, 24 December (Argus) — The stage is set for weak benzene prices going into next year as Benzene fell 201.25¢/USG in the fourth quarter, losing 48pc of its value on its way to a five-year low of 217¢/USG in intraday trading 16 December.
US benzene traders sat out of the market throughout much of December, waiting for a price floor. Buyers were reluctant to step in despite the contango seen in the forward months, where a 2-3¢/USG premium per month is seen through the first quarter.
Volatility in the benzene market — seen recently in what one trader called a "dead cat bounce" of 15¢/USG 17 December — kept buyers cautious and activity thin.
The US market is facing pressure from both falling crude prices and imports from Asia, where benzene remains at a discount to the US. Ample domestic supplies and imports are pressuring margins for US producers going into the new year and contributing to market uncertainty.
Declines in US benzene prices outpaced movements in WTI during December, in large part because of imports from Asia. Forward-month fob Korea prices maintained at least a 33.41¢/USG ($100/t) discount to US prices in mid-December, with freight estimated at roughly $57-60/t at any given time.
During the first half of December, 1.02mn t of spot benzene traded, less than the liquidity seen in November and October, when 1.44mn t and 1.13mn t traded, respectively. More cargoes from Asia are due to arrive in January, contributing to supply length and weaker prices in the US.
Market participants suggest a seasonal uptick in derivative styrene demand in the first quarter, coupled with a potential recovery or stabilization of crude prices, could bolster sentiment in the benzene market in the months ahead.