26 April 2010 09:24 [Source: ICIS news]
By Mahua Chakravarty
SINGAPORE (ICIS news)--Asia’s abundant benzene supply may be shaved over the next few months as regional producers and traders actively look at shipping cargoes to the US and Europe, given an open arbitrage window, industry sources said on Monday.
A move by some producers to switch feedstock to liquefied petroleum gas (LPG) from naphtha, for petrochemical production would also serve to curb production of the aromatics going forward, they said.
Cutting the oversupply would do well for benzene prices in Asia, which had lagged behind the sharp gains seen in the ?xml:namespace>
“I think fundamentally the market is getting better,” said a Korean trader.
Spot benzene values in Asia were hovering at $995-1,010/tonne (€746-758/tonne) FOB
Based on benzene prices on 23 April, the Asia-US gap was $41-56/tonne, while the Asia-Europe gap was a bigger $135/tonne, market sources said.
The open arbitrage window would see about 50,000-60,000 tonnes of benzene leaving the Asian shores for the US this month, and another 40,000-50,000 tonnes due to be shipped out in May, based on estimates of industry players.
Asian benzene bound for
Last Friday, US benzene prices closed at $3.45-3.55/gal FOB US Barges and Europe’s prices were at $1,125-1,140/tonne CIF (cost, insurance and freight) ARA (Amsterdam, Rotterdam and Antwerp), against $990-1,005/tonne FOB (free on board) Korea in Asia.
Shipping fixtures for a total of 48,000 tonnes of benzene were expected to be loaded from
A shipping fixture for a 21,000 tonne parcel of benzene for the same destination would also be loaded in the first half of May from
Freight costs for shipping benzene from South Korea to the US Gulf region was hovering in the $40-50/tonne region, while to the ARA region freight charges for 10,000-12,000 tonnes of benzene were at about $75/tonne, said a shipping broker and some traders.
Tight supply in Europe caused benzene prices to spike towards the end of March, triggering a price uptrend in the
Meanwhile, benzene supply might also be reduced in May and June as some regional petrochemical producers were considering cracking LPG - a lighter feedstock than naphtha, and is known to produce less aromatics, market participants said.
“The surplus in this region is going down and LPG cracking will help,” said a Korean producer.
On the demand front, there could be an improvement as maintenance turnaround at Asian downstream styrene monomer (SM) plants ends next month, industry sources said.
Demand from the SM sector had softened since February due to a slew of turnarounds in SM facilities in northeast
($1 = €0.75)
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