Asian benzene at a dollar/ton premium to toluene prices, on rising benzene exports to USA

25-Aug-11

Asian benzene prices are at a US$1/mt premium to toluene. FOB Korea toluene marker was assessed at US$1117/mt on Tuesday, up $13.50 from Monday, while the FOB Korea benzene marker was assessed at US$1118/mt, up $20 from Monday, as per Platts. Benzene is on the rise in Asia from a discount of US$5.50/mt on the previous day, amid increasing benzene exports to the US. Benzene traded at it deepest discount in 23 months on August 8 at US$39/mt, after which prices have been on the rise. About 50,000 mt of benzene will be shipped to USA in August and up to 100,000 mt in September. Typically, the US is a major market for South Korean benzene, as the latter is oversupplied Benzene needs to be at a premium of US$100-120/mt to toluene for operators of toluene disproportionation and hydrodealkylation units to breakeven, meaning the premium has to rise considerably before TDP and HDA operators restart their units or increase operating rates. In Japan, JX Nippon Oil & Energy, which had cut runs at its Mizushima TDP unit to about 70% on July 18 after a fire at a refinery, has kept runs reduced due to the unfavorable spread. The TDP unit, with 90,000 tpa benzene capacity and 100,000 tpa isomer-grade mixed xylenes capacity is scheduled to be shut for a 45-day turnaround from early September, and runs will be raised only after that. JX also operates another TDP unit at Chita with capacity to produce 100,000 tpa of benzene and isomer-grade mixed xylenes, each; which has been shut since July 8-9 because of the poor economics. Since July, Japan's Maruzen Petrochemical has also cut production rates at its HDA unit at Ichibara, Chiba, to about 50% of its 130,000 tpa benzene capacity, from about 100% earlier.