The widening spread in benzene spot prices between the US Gulf and Northwest Europe is expected to continue, making the arbitrage from Europe to the US attractive, traders said Monday.
The European spot price of benzene was assessed at $570.50/mt CIF ARA on Friday. A bid-offer range of $565-$580/mt CIF ARA for September loading was heard Monday afternoon.
US markets were closed on Monday for Labor Day. But on Friday the spot price was assessed at $613.50/mt, putting the premium over Europe at $43/mt.
“Product will move since the arbitrage will open up,” a European trader said Monday, adding that freight costs for a 5,000 mt benzene parcel were currently quoted at $45/mt. “There is already some movement. This will clear the benzene length out of Europe,” the source added.
A second trader said the arbitrage to the US was being investigated by traders: “But the [NWE] market bid is above the arb at this moment,” he added.
Benzene prices have remained under pressure in Europe since the start of August. The monthly contract price of benzene settled at $585/mt CIF ARA for September, down from $863/mt in August.
Lower crude oil prices and lower demand for benzene derivatives from Asia have weighed on European prices in the third quarter, sources have said.
“The arbitrage to US is theoretically open. Depending on exports the, situation [in Europe] can change,” a third market source said Monday.