FocusChina crude benzene to extend gains on limited supply

21 November 2011 10:04  [Source: ICIS news]

By Stephanie Zhang

SINGAPORE (ICIS)--China’s crude benzene prices may continue to increase this week given tightening supply, as manufacture of by-product coke is being curtailed because of soft demand, industry sources said on Monday.

Spot prices were assessed at yuan (CNY) 6,350/tonne ($1,000/tonne) ex-tank in east China on Monday, up by CNY50/tonne from Friday’s levels, according to data from Chemease, an ICIS service in China.

Prices have been rising since early this month because of reduced output, market sources said.

Crude benzene is among the by-products in the manufacture of coke, which is used in the smelting process of iron ore to produce steel. One tonne of crude benzene is derived from producing 100 tonnes of coke.

Coke prices have been on a downturn since the start of November amid slowing demand for steel, while the cost of coal – the feedstock for production – has remained firm. This situation forced producers to run plants at reduced capacity to keep price from falling continuously, industry sources said.

Crude benzene producers are offering cargoes at CNY6,400-6,450/tonne, but no deals were concluded at these levels, as yet. Buying indications were at CNY6,350-6,400/tonne, market sources said.

The expected price gains this week, however, may be capped at CNY100/tonne because of weak demand coming from the downstream hydro-coking benzene sector, industry sources said.

"Buyers insist on lower prices,” said a producer, citing depressed prices of hydro-coking benzene values are also currently weak. Hydro-coking benzene prices were assessed at CNY7,600/tonne on Monday, according to Chemease.

Hydro-coking benzene is a cheaper alternative to normal benzene as feedstock in the production of styrene, cyclohexanone and aniline.

Normal benzene was assessed at $7,600-7,650/tonne on Monday, Chemease data showed.

($1 = CNY6.35)

By: Stephanie Zhang

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