Asia benzene falls on oversupply, weak downstream market

04 March 2010 10:02  [Source: ICIS news]

SINGAPORE (ICIS news)--Benzene prices in Asia shed $45/tonne (€61.6/tonne) in just two days this week due to oversupply, tracking declines in the regional downstream styrene monomer (SM) market, traders said on Thursday.

On Thursday afternoon, prices for April-loading parcels touched a four-month low at $855-870/tonne FOB (free on board) Korea, down $25-30/tonne from Wednesday’s close, according to global chemical market intelligence service ICIS pricing.

Prices seemed poised to dip further as the lowest bid for April cargoes was at $845/tonne FOB Korea but this failed to draw any offer, market players said.

The losses so far this week were just $10 short of the $55/tonne lost in the week ending 26 February given high production this quarter, based on ICIS pricing data.

Majority of regional crackers were running at almost full load, while a number of toluene disproportionation (TDP) and hydro-dealkylation (HDA) units had also ramped up operations around the beginning of this quarter, market sources said.

Price pressures were also coming from softness in the US benzene market as players anticipated demand for US-made SM coming from Asia would weaken, they said.

SM supply growth in Asia has been outpacing demand, resulting in falling prices.

Spot SM prices slipped below $1,250/tonne CFR (cost and freight) this week from $1,350/tonne CFR in the second half of January, according to ICIS pricing.

“SM prices in Asia are low, so it is not sure that SM from the US could find a home here,” said a regional benzene trader.

Asia exports a monthly volume of about 40,000-50,000 tonnes of benzene to the US. The imported benzene is used in the production of US-made SM, which is exported to Asia.

China is a major buyer of the monomer, with monthly imports of around 250,000 tonnes of US SM.

($1 = €0.73)

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By: Mahua Chakravarty
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