FocusAsian benzene values dive, yet to bottom
24 October 2008 06:38 [Source: ICIS news]
By Mahua Chakravarty
SINGAPORE (ICIS news)--Asia benzene has lost more than half its value since the start of the month, depressing spot trade, with few players willing to hazard a guess when the market will hit bottom, traders and producers said on Friday.
Prices declined an unprecedented $545-555/tonne since the week of October 3 to $430-450/tonne FOB Korea on Thursday, the lowest seen since October 2003, according to global chemical market intelligence service ICIS pricing.
“I have no idea about the bottom, the situation is very difficult,” said a Japanese trader, echoing the sentiment seen among most traders and some producers in northeast Asia.
“If crude and naphtha stops dropping, then some buyers could be seen,” said a key South Korean producer referring to the influence of feedstock prices.
Crude values went down to $67/bbl earlier this week, while naphtha prices plummeted to below $400/tonne CFR (cost and freight) Japan, directly affecting benzene prices.
“At the moment, there are no buyers,” the Korean seller added, referring to the shrinking demand for benzene seen especially in northeast Asia.
At least three styrene monomer (SM) producers in South Korea were heard cutting operating rates further this week on the back of poor derivatives market scenario, said traders and a producer. No confirmation was available.
“Demand from the downstream is weak, [and] many buyers are cancelling volumes,” said the Japanese benzene trader. Demand from the SM sector, which absorbs about 50% of Asia’s benzene, has been weak since the second quarter.
As a result, inventory levels in northeast Asia were in surplus at present, said traders and producers, adding that there was limited scope for shipping benzene from Asia to the US although the arbitrage window was technically open.
Weak demand in the US and the current price volatility were some of the deterring factors, said traders and a producer.
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By: Mahua Chakravarty
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