US September benzene expected to decline

HOUSTON (ICIS)–US August benzene contract prices are expected to decline on lower spot values following a volatile week for upstream crude oil and global financial markets.

Contract prices generally take direction from the spot market in the week prior to settlement.

Benzene spot prices have been under pressure in August from declines in upstream crude oil and from soft demand as buyers await a price floor.

But prices dropped sharply this week as deep declines in global financial markets pushed upstream West Texas Intermediate (WTI) crude oil futures to the lowest level since 2009.

Benzene spot values fell 10-20 cents/gal on Monday from the week prior. By Wednesday, US benzene deals were heard as low as $1.88/gal FOB.

However, on Thursday WTI futures recovered the early week losses as the US stock market rallied. Week on week, WTI values increased 3.5%.

Benzene spot prices tracked the upstream surge, with deals heard Thursday afternoon at $2.05-2.06/gal FOB, but benzene prices fell short of last week's $2.06-2.15/gal FOB value.

Benzene spot values also are 75-84 cents/gal lower than a month ago, when deals ranged $2.72-2.80/gal FOB in the week prior to the August contract, which settled at $2.80/gal.

With lower spot prices this week, the September contract price is expected to decline. But the recent volatility of benzene spot values, upstream crude oil and financial markets, makes the settlement difficult to predict.

Market expectations for the settlement are somewhere near $2.00/gal FOB.

US benzene contract prices generally settle on the last day of the prior month.

Major US benzene producers include ExxonMobil, Flint Hills Resources, LyondellBasell, Marathon Petroleum, Shell and Phillips 66.