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Europe aromatics to remain unstable

December 29/2011

(ICIS) -- Following on from an erratic 12 months, 2012 is expected to contain more uncertainty for European aromatics players.

With many unwilling to commit to building stocks in a precarious economic environment, the sharp pricing peaks and troughs seen in 2011 look set to be an ongoing feature of the landscape next year.

Looking back at benzene price developments across 2011, the key trend appears to have been unforeseen production issues or even capsized vessels in the Rhine pushing up numbers, quickly followed by upstream volatility and wavering demand driving the market back down.

In this market it is either feast or famine, said one source earlier this year.
And while January looks to be a firmer month for both benzene and styrene the former in particular many sources are guarded about predictions for anything beyond that.

With benzene currently trading at more than USD 100/tonne above the December contract price, a number many felt was unusually low, a sharp correction is expected in the new year as the market begins to replenish empty tanks.

Despite this, many observers remain less than sanguine about how the market will shape up as the first quarter progresses.
An earlier-than-usual Lunar New Year in 2012 will see the Asian markets slow down as February approaches, and beyond that will largely depend on external factors.
While benzene has always been closely linked to the health of the wider global economy, next year this will be even more pronounced than usual.

There are mixed opinions about how crude prices will develop, with some pundits suggesting a sharp drop from the current USD 100-plus/bbl levels seen, while others expect that volatility in the Middle East may push prices up even further.

Most market sources believe that paraxylene (PX) will be structurally short in 2012, and say demand will strengthen after the start-up of Artlants new 700,000 tonne/year purified terephthalic acid (PTA) plant in Sines, Portugal, early in the year.

However, with concerns that the economy might dampen demand, players have adopted a wait-and-see stance.
Regarding the strength of the PX market in Europe next year, one trader said: "It will be better, but all will depend on the economic situation in good old Europe."

Author:Marina Ivanova
Tags:naphta, oil, paraksilol, styrene, terephthalic acid.
Category:General News
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