HOUSTON (ICIS)–The US October benzene contract price is expected to increase slightly, smaller than in recent months amid a more stable spot market, sources said on Tuesday.
Contract prices generally take direction from the spot market in the week prior to settlement. During most of 2015, the spot market has been volatile, resulting in steep month-on-month changes in contract prices.
Contract prices in 2015:
* average price of split settlements
Prior to the September settlement, which was 79 cents/below August contract values, spot benzene prices had been under pressure from record lows in upstream WTI crude futures, which fell below $40/bbl. The downtrend and volatility kept demand in the benzene market subdued in late August as buyers awaited a price floor.
However, upstream values have been higher and less volatile this month with WTI remaining in the mid $40s/bbl. The stability, along with increased buying activity in the benzene market, helped offset ample benzene imports and pushed benzene spot prices slightly higher than a month ago.
Spot benzene prices in the last week ranged 2.07-2.12/gal FOB (free on board). This week, bid/offer levels have been slightly lower, with spot benzene assessed at $1.98-2.08/gal FOB early on Tuesday.
Market sources expect October benzene to settle at 2.05-2.10/gal FOB, which would be a 4-9 cents/gal increase over the September settlement.
The US benzene contract is typically settled on the last day of the previous month.
Major US benzene producers include ExxonMobil, Flint Hills Resources, LyondellBasell, Marathon Petroleum, Shell and Phillips 66.