FocusAsian benzene prices hit two-month high; may strengthen further

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

By Mahua Chakravarty

SINGAPORE (ICIS news)--Benzene prices in Asia hit a two-month high on Tuesday and may rise further in the next few weeks on the back of bullish aromatics markets in the US and Europe and strong crude values, said traders and producers.

Spot benzene prices breached the $1,000/tonne (€740/tonne) FOB (free on board) Korea mark on Tuesday to at $1,000-1,015/tonne – levels not seen since 26 January 2010, according to global chemical market intelligence service ICIS pricing.

Prices had gone up by about $105-110/tonne in the past two weeks, based on ICIS pricing data.

On Tuesday, sellers quoted higher offers of $1,025-1,030/tonne for May-loading cargoes, but bids remained much lower at $1,000/tonne, market sources said.

Bids for second-half April loading lots also surfaced at $995-1,000/tonne, but no sellers stepped forth with offers, they added.

An overnight spike in crude futures prices above $82/bbl, along with continuing firmness in the US and European benzene markets were driving the strong prices in Asia, market players said.

“[Going forward] there seems to be more upside for benzene,” said a key regional trader, citing the current supply tightness in the European benzene market that should keep prices buoyant across three regions.

Asian exporters were heard to be looking at fixing parcels for April shipment to the US and Europe because of the strong price trend.

Asia is a net benzene exporter to the US, with the region total first-quarter shipments to the US estimated at 150,000 tonnes, said market participants.

Sentiment in the spot market was also more bullish for May as demand from the key downstream styrene monomer (SM) segment was expected to improve when SM plants restart, market sources said.

A slew of turnarounds at SM units in northeast Asia from March had slowed down demand for benzene as the sector absorbs about half of Asia’s total benzene production, market sources said.

The expected resurgence in demand would help address the benzene surplus in the region. Prices for May-loading cargoes were fetching a premium of about $5-10/tonne against second-half April shipments, they said.

Supply of aromatics may also fall as a number of regional crackers were anticipated to switch to using liquefied petroleum gas (LPG) as feedstock instead of naphtha, starting end April or May, market sources said.

Cracking of LPG is known to reduce aromatics supply, said a Singapore-based trader.

($1 = €0.74)

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By: Mahua Chakravarty
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