22 July 2009 05:06 [Source: ICIS news]
By Mahua Chakravarty
SINGAPORE (ICIS news)--Asian benzene may remain volatile in the coming weeks with no firm direction from crude, and with price support from tight supply being negated by expectations that its major downstream styrene market would weaken in August, industry sources said on Wednesday.
“It’s very difficult to judge the direction of the market. Hence, we are not taking any big positions,” said a key regional trader.
Benzene was largely stable with a tendency for weakness this week, market sources said.
It was trading at $840-850/tonne (€588-595/tonne) FOB (free on board) ?xml:namespace>
Crude oil movement will largely dictate the benzene market, industry sources said. NYMEX light sweet crude was trading at $65/bbl levels on Wednesday, slightly easing down in
“The market will depend on crude and could remain stable around the current $850/tonne FOB (free on board)
“Price-wise the market will likely fluctuate more,” said a Japanese producer.
While strong crude and tight benzene supply support prices, the anticipated slowdown of demand from key downstream styrene monomer (SM) market in end-July or August could put some downward pressure on benzene, market sources said.
SM is the largest downstream in
Some regional SM producers could be considering cutting operating rates from next month due to poor outlook of derivatives styrenics, said producers and traders.
The recent uptrend in feedstock benzene prices was also putting pressure on SM production margins, they added.
SM prices were hovering at about $1,060-1,080/tonne CFR (cost and freight)
Some market players, however, maintained that demand from regional SM producers could hold up in the coming month.
The tight benzene supply in Asia would be the key support for the market in the meantime, said traders and producers.
“Prompt cargoes for first-half and second-half August is quite tight,” said a Japanese trader.
“Many producers don’t have the flexibility of [increasing] supply at present,” said a Japanese producer, citing that refining margins were getting squeezed.
Benzene supply in Asia has been tight in the past month as refineries in
Some of the regional crackers were also using LPG (liquefied petroleum gas) as secondary feedstock which is known to reduce aromatics output, said traders and producers.
But this tight supply scenario could change in the coming weeks as some toluene disproportionation (TDP) producers could be planning to restart their plants on the back of improved margins.
An Indonesia-based producer was also expected to restart production, said two Japanese traders.
($1 = €0.70)
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