Acetone Report
(An Analysis by Wilf Kimball)

April Large Buyer Contract settled at $0.585, somewhat higher than analysts had predicted. This was drop of $0.075 from March.

At the same time average Refinery Grade Propylene reduced by $0.08. An analysis of netbacks over RGP costs per pound of acetone would indicate we are more in a supply/demand scenario than RGP driven. Historically Large Buyer discounted margin over RGP has averaged $0.07 -$0.08 per pound of acetone. In both March and April this has jumped to $0.12 - $0.13. This would indicate that Large Buyers are more concerned about availability than price. Producers are enjoying a margin improvement of $0.05 per pound, certainly offsetting low phenol margins.

At the same time, Distribution net back pricing to producers has maintained a roughly $0.16 per pound margin over RGP since November of last year.

For those who propose that RGP will control Acetone pricing and it very well may do so in the future, it doesn’t ring true with April Large Buyer settlement. In the Distribution market, the $0.47 and lower spot trades for RGP in April had many Distributors and end use customers reducing inventories to bare minimums predicting much lower pricing in May. However last week RGP began to regain ground and at end of week was at $0.5275.

So where does that leave us? With several plants having either operating problems or planned shutdowns and little, if any, import material on the water, it would suggest that pricing in May will surely be supply/demand driven. As non producer inventories are reduced, and no incentive for producers to sell into distribution at lower netbacks than barge prices, it would appear that distribution pricing will hold if not, increase in May.

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Benzene Report
(An Analysis by Jose Flores)

The USGC benzene settlement for May 2013 was concluded at $4.47 per gallon, an increase of $0.11 per gallon from prior month. The settlement puts an end to a 3 month streak of falling USGC benzene contract settlements. The higher US price was sparked mostly by higher prices in Europe where benzene trade peaked at $1,410MT ($4.71/gal) late in the month, up from $1,285MT ($4.29/gal) during the first week of April. Also helping was heavy trading activity late in the April, with the last week seeing over 400,000 bbls exchange hands in the USGC.

Despite the uptick in price, there was a general sense in the market that benzene inventory levels were adequate to meet demand and even long after accounting for imports arriving late April. This became grossly apparent soon after May CP was announced. The SAME DAY of the announcement, May benzene price tumbled $0.12 -0.17 per gallon below contract. At the time of this report, May DDP barrels had a bid/ask range of $4.20 - $4.40 per gallon and FOB terms had a $0.06 – 0$.08/gal premium. It is evident that the benzene storage capacities in the USGC are at or near the limit and sellers are calling to deliver DDP barrels early in the month. Demand for benzene has been disappointing for the most part and is mostly being carried by styrene producers. The phenol/acetone units are running well below capacity despite some scheduled maintenance this quarter and as a result cumene producers are not pulling in their “normal” benzene consumption. Demand from cyclohexane production is not helping either, with one large unit being down for maintenance and another came down unexpectedly in April. Toluene conversion rates are high with STDP and TDP units being profitable. HAD units remain at below breakeven levels and an uptick in toluene prices this past week is lowering conversion margins. As we can see, benzene price is under bearish pressure for the most part BUT there is some light at the end of the tunnel. Import statistics reveal there are lower volumes of benzene headed this way from Asia due to a tight arbitrage window. Also, a styrene plant that can consume @ 20,000bbls of benzene per day is scheduled to be back on line soon after being down for maintenance. Similarly, the cyclohexane units that were down are also expected to be back on line sometime in the near future and surely soak up some benzene. (Sorry, no relief is expected from cumene/phenol anytime soon)

Europe price also tumbled late April and is providing no relief to US market. The European benzene contract price for May settled at $1385/MT ($4.627/gal), up $118/mt from previous settlement. Similar to US, prices sank shortly after and at the time of this report the bid/ask range for prompt volume for EU was discussed at $1355-$1,370mt. Asia price for prompt is being talked about at a $1,300 - $1,310 range. It is reported that a large producer involved in contract negotiations has settled May contract price at $1,320MT ($4.41/gal) but it was not fully confirmed at time of this report.

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Heavy Aromatics Report
(An Analysis by Steve Willett)

Global crude oil prices fell slightly over April to settle with West Texas Intermediate Oil Price at $93/bbl and the Brent Crude Oil price at $103/bbl. Motor gasoline prices have fallen more dramatically over April down to $2.83/gl.

The alkylation value for propylene in motor gasoline was flat in April at $0.783/lb. The refinery grade propylene price ebbed and flowed over April and appears to be settling around $0.50/lb.


As goes the energy market so goes the aromatics market. The toluene market has slowed and prices steadily weakened over the past month, as supply appears to be ample and demand flat. The leading edge in this market, the U.S. Gulf barge prices have weakened. Resellers in the market have also reduced prices over the month reflecting the barge price decreases.


The price for A100 fell slightly to $0.62-$0.67/lb FOB USGC.


The A150 market has tightened in the short term due to the increased demand for the product in the Agricultural Market. Two A150 producers reported production problems during April with a severe supply impact to the market. However pricing remained flat at $0.66-$0.72/lb FOB USGC.


Toluene pricing fell to $0.57-61/lb FOB USGC and Xylene fell to $0.60-$0.63/lb FOB USGC.


No operations news emerged. Flint Hills Resources continued ramping up rates at its Port Arthur olefins unit, and PetroLogistics Propylene continued increasing rates at its PDH unit. Dow's Freeport LH-7 unit remained shut for maintenance, as did Chevron Phillips' Port Arthur unit.

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