London — The spread between naphtha and benzene has fallen to a nine-week low as a result of strength in the feedstock naphtha market, coupled with lackluster fundamentals in the benzene market, according to S&P Global Platts data.
The 5-30 day forward benzene spot price was assessed at $860/mt CIF ARA and the naphtha CIF NWE cargo price at $656/mt on Thursday, placing the spread between the two prices at $204/mt, its narrowest point in nine weeks.
Benzene’s premium to naphtha was last assessed lower on May 25, when it dipped to $202/mt.
The lower premium to naphtha is in part a function of a stronger naphtha market, where cracks have strengthened despite stronger crude oil prices. The August CIF NWE naphtha crack swap rose 15 cents to minus $1.35/b at Thursday’s close, a value which represented a 29-week high for the paper instrument, which was last assessed higher at minus $1.20/mt on January 3, 2018.European naphtha-benzene spread strong feedstock lackluster aromatics
According to naphtha sources, a recent spate of buying from Europe’s petrochemical sector combined with profitable gasoline-blending margins has helped to clear a recent glut of product at the region’s prompt spot market.European naphtha-benzene spread strong feedstock lackluster aromatics
That demand has translated into stronger cash premiums across the complex, including grades of light virgin naphtha which in recent weeks have struggled to receive their usual levels of blender inquiry from the West African gasoline complex.
A stronger pull from the WAF region has LVN grades pegged in the double digits, which in turn has removed the pressure exerted by the highly paraffinic grade on open specification premiums.European naphtha-benzene spread strong feedstock lackluster aromatics
In the benzene market, however, market fundamentals have eased this month, following production issues in Europe at the end of June, which led to surging spot prices at the time.
Tightness has cleared in July, with the market well supplied, even in light of logistical difficulties as a result of low Rhine water levels.
Benzene demand has been lackluster as uptake from its main downstream market — styrene — has been slow.European naphtha-benzene spread strong feedstock lackluster aromatics
This outweighed demand for benzene from the downstream phenol and acetone markets, where production rates were heard to be firm.
Spot activity in the benzene market has been limited in Europe this week amid muted demand.European naphtha-benzene spread strong feedstock lackluster aromatics
–Philip Reeder, philip.reeder@spglobal.com
–Yuriko Kato, yuriko.kato@spglobal.com
–Edited by Maurice Geller, maurice.geller@spglobal.com
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