European benzene's premium over naphtha slipped to a seven-week low, despite continuing lack of clarity on the market direction going into June.
The spread between spot benzene and its feedstock naphtha was assessed at $500.25/mt at Wednesday's close, Platts data showed.
Spot benzene barges were last assessed at $1,345/mt CIF ARA, while naphtha was assessed at $844.75/mt CIF ARA.
The last time it was assessed lower was April 11, when it reached $478.75/mt on a rising trend amid curtailed availability of benzene on the back of a number of planned and unplanned shutdowns and reduced run rates at crackers and refineries.
The current level is a more than $100/mt decline from the most recent peak of the spread on April 23, when it hit a 10-month high at $615/mt.
"It is still $200/mt too high," one trader said, comparing the current premium to what was the usual level in previous years.
Despite initial expectations that the European region could further tighten on benzene in May, the market remained well-balanced throughout the whole month and spot prices were rangebound.
"I think there is a recognition of the fact that the market is currently well-balanced. There is no drive for higher prices, as benzene's premium to naphtha is still very strong," a second source said.
"We do not see any trend, the market appears to be stuck in the same range," a third trader said, adding that the lack of direction was due to conflicting signals from the market's own fundamentals and the general macro-economic background.
"Benzene's fundamentals should be pointing to higher prices. There is little stock throughout the chains and downstream units are going to ramp up in June. On the other hand, there is a lot of negativeness which does not allow prices to rise," he added.
It was not clear how low the stocks were, but one consumer said that whereas the absolute level of inventories was lower than normal, relative to the actual consumption, which has shrunk, it was likely to be steady.
"There is no need to build stocks now. But the number of days that inventories cover may not have changed, because the demand structure is lower," he said.
