FocusTight supply to support Asia benzene in near-term

19 March 2009 07:52  [Source: ICIS news]

By Mahua Chakravarty

SINGAPORE (ICIS news)--Asian benzene values were expected to be stable or rise in the next few weeks due to tight availability in Japan and stronger demand from key downstream styrene monomer (SM) segment, traders and producers said on Thursday.

Benzene prices have climbed to $440-450/tonne (€325.6-333/tonne) FOB (free on board) Korea at mid-day on Thursday from high-$300/tonne FOB Korea levels seen at the beginning of March, according to global chemical market intelligence service ICIS pricing.

"Benzene is being led by tightness in the Japanese market," said a key Japanese producer.

An estimated 30,000 tonnes of benzene could have been purchased by the Japanese buyers in the past few weeks, which in turn supported the Asian market, said a Korean producer.

Supply in the Japanese market has tightened since March as most crackers and reformers continued to operate at an average of 80% due to the weak market conditions in the past few months, said producers and traders.

Availability was further reduced in the past few weeks as some crackers in Japan could be using liquefied petroleum gas (LPG) as an alternative feedstock to naphtha because the former was better priced, they added. However, no immediate confirmation was available.

Aromatics output falls by about 10% when LPG is used compared to the usual production when the feedstock is naphtha, the Japanese producer added.

Japanese sellers were reducing inventory levels as the fiscal year was drawing to an end in March, the Korean producer said.

The SM producers in Japan were ramping up output as SM production margins had improved in the past month or so, traders added.

SM prices have been on a sharp uptrend in the past month and were at $860-870/tonne CFR (cost and freight) China on Thursday.

"Demand is recovering from the SM segment as the producers are restocking and production margins are very good," said a Japanese trader.

($1 = €0.74)

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By: Mahua Chakravarty
+65 6780 4359

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