Benzene in Asia to soften in near term as supplies build up amid lack of demand

18-Jun-13

Spot benzene prices in Asia are likely to move sideways or even soften in the near-term, weighed down by a lack of physical demand while regional supply is building up, market players said in ICIS. The markets lacked in spot enquiries this week from China and USA – the two largest outlets for Asian benzene, amid a closed arbitrage window. On 13 June, benzene prices closed at an 11-week low of US$1275-1277/ton FOB Korea for June and July cargoes; US$1265-1270/ton FOB Korea for August parcels; and US$1265/ton for September lots, according to ICIS data. The price spread between FOB Korea basis and equivalent import parity in China swung into negative territory from early March, with the gap widening into May. Sinopec cut its benzene list prices by a total of yuan (CNY) 600/tonne ($98/tonne) in May, representing a much steeper decline compared with spot values in the international markets. South Korea’s two largest benzene producers have resorted to buying cargoes within the US market to serve their customers in that country, as it is way cheaper to buy in US than for us to ship over. Japan, the second biggest Asian benzene exporter to the US, has been shipping out lesser volumes since March. In Taiwan, benzene end-users are continuing to delay procuring term volumes on the back of mounting stock levels in Kaohsiung, and ahead of scheduled turnarounds at two local styrene monomer (SM) facilities in the island, market players said. Formosa Chemicals & Fibres Corp (FCFC) plans to shut two of its SM units in August for maintenance. The 250,000 tpa No 1 and 350,000 tpa No 2 units in Mailiao are expected to be down for around 40 days. Spot benzene demand from Southeast Asia, on the other hand, has died down in end-May after a buying frenzy that ensued because of some mechanical problems at benzene production at a Singapore-based aromatics facility. Southeast Asia does not usually buy spot cargoes, with its requirement covered by term supplies. Moreover, lower operating rates of a Thai aromatics unit and an outage at a Thai reformer in May curtailed the spot supply condition regionally.