09 February 2009 06:20 [Source: ICIS news]
By Mahua Chakravarty
SINGAPORE (ICIS news)--Asian benzene rose to its three-month high above the $400/tonne level (€308/tonne), boosted by higher values of feedstock naphtha and supported by strong demand coming from China, said traders and producers on Monday.
Prices were assessed at $405-415/tonne FOB (free on board) Korea at the close of Friday’s trades, $35-40/tonne higher than the previous week’s close and the highest seen since 11 November 2008, according to global chemical market intelligence service ICIS pricing.
Benzene producers hiked the prices in view of last week’s rise in feedstock naphtha values to $466-467/tonne CFR (cost and freight) ?xml:namespace>
“Sellers can’t continue to sell benzene lower than naphtha,” the trader said.
Cracker operators’ aromatics production margins have been under pressure even though toluene values at $575-585/tonne FOB
Naphtha has been trading higher than benzene since 12 December 2008, cutting into benzene production margins severely.
“Margins are still negative as benzene price is much lower than naphtha, and benzene is important for BTX production cost,” said a Korean cracker operator.
An estimated spread of about $140-150/tonne is taken as the variable cost of production of BTX from naphtha.
Also, supporting last week’s price increase was strong demand from Chinese importers, who returned after a week-long break from Lunar New Year celebrations, to replenish stocks, traders and producers added.
Shortage of coal-derived benzene supply in the domestic market and limited availability from local suppliers had ensured that Chinese importers will still seek spot parcels after buying actively in the past two months, said a Korean producer and a regional trader.
The prevailing weakness in the Chinese steel industry has resulted in lower production of coal-derived benzene, said a Korean benzene producer.
Since 2 January 2009, benzene prices in this region have spiked $115/tonne supported by strong import demand from
In December 2008 alone,
But this spate of buying might not be reflective of the true state of market fundamentals, which was still suffering from a dramatic slowdown in downstream markets like styrene monomer (SM) and phenol, said benzene producers and traders.
“This buying is not real demand as the downstream is still not so active,” warned a Korean producer.
($1 = €0.77)
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