BP Refinery Blast: Asian benzene prices stabilise
28 March 2005 06:14 [Source: ICIS news]
SINGAPORE (CNI)--Asian benzene producers and traders are still assessing early on Monday the impact of the BP refinery explosion in Texas, US on benzene supplies and prices, before deciding whether to April ship cargoes to the west, CNI was told.
On 23 March, the explosion occurred at the refinery's isomerisation unit, which increases the octane level of gasoline. Fifteen people were killed in the blast, with 11 remaining in the hospital. The 470,000 bbl/day refinery represents 3% of North American gasoline production capacity.
Early on Monday, offers and bids for Asian benzene stabilised at $1,150/tonne FOB Korea and $1,080-1,100/tonne FOB Korea, respectively, after jumping significantly by $40-45/tonne on Thursday. The sharp price rise from Wednesday was a knee-jerk response to the refinery explosion news.
"The arbitrage flow would depend on whether the gap between US and rising Asian prices is wide enough to make it viable, after factoring in freight at $80-100/tonne," said a trader.
US benzene deals for April had risen to $3.94-3.96/gallon FOB US Gulf Coast late on Thursday, up from $3.85-3.87/gallon FOB US Gulf Coast a day earlier.
US benzene prices for April cargoes were around $1,170/tonne FOB US Gulf Coast, but prices for May cargoes were expected to rise because of the refinery explosion.
"No one is quite sure how high US benzene prices will rise. It will depend on the result of the investigations and whether the authorities call for a prolonged shutdown of the refinery," said a Japanese producer.
Another factor that could deter Asian suppliers from reopening the East-West arbitrage window was the bullish expectations for Asian demand and spot prices in the near term.
Although Asian supplier inventories for March are slightly high, the region was expected to experience a net shortage of 20,000 tonne next month, the producer said.By: Prema Viswanathan+65 6780 4359
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