30 December 2008 04:26 [Source: ICIS news]
By Mahua Chakravarty
SINGAPORE (ICIS news)--Asia’s benzene producers could keep operating rates below capacity in the first quarter of 2009 in anticipation of weak downstream demand and net supply rising when new plants in China and the Middle East start up, producers and traders said on Tuesday.
“Balance will not be short and operating rates will be adjusted in line with market balance,” a South Korean trader said.
Majority of the regional cracker operators and reformers have been running below capacity since early fourth quarter due to weak downstream demand and falling prices.
“It will be difficult to find [an] outlet for benzene, so producers will hesitate to raise operating rates,” said a key South Korean producer.
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The rising supply of benzene was the topmost concern of most producers and traders for next year, as they have already battled through a difficult 2008 with issues like oversupply, poor margins, price crash, credit problems and weak downstream demand in the backdrop of a deepening global economic and financial crisis.
Demand from downstream segments like styrene monomer (SM) and phenol, which has been weak since the third quarter this year, was unlikely to improve in 2009 and that would worsen the benzene oversupply situation, they added.
“Market will be long also because of poor demand from end-products like automobiles and housing,” the same Korean producer said.
New plants in the downstream sector, such as Iran-based Pars Petrochemical’s 600,000 tonne/year SM unit, were due to start production in the first quarter of 2009 but these plants were likely to run below capacity after coming on stream, said benzene producers.
In this scenario, Asian benzene export to the
The Asian benzene market is expected to see price stability or even some increases in the run-up to the
But any price gains would be limited as the
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