UpdateAsia benzene at five-month high on firm US values, crude gains

18 January 2012 05:27  [Source: ICIS news]

By Mahua Chakravarty

SINGAPORE (ICIS)--Asia’s benzene prices hit a five-month high on Wednesday, tracking gains in US prices as crude values spiked overnight, market players said.

Spot prices rose $30/tonne (€24/tonne) at $1,195-1,205/tonne (€944-952/tonne) FOB (free on board) Korea early on Wednesday, the first time that $1,200/tonne level was breached since early August, according to ICIS data.

US crude was trading at above $101/bbl on Wednesday, after rising by more than $2/bbl overnight.

A March-loading cargo was concluded at $1,200/tonne FOB Korea, while an April shipment was done at $1,198/tonne FOB Korea, market sources said.

Offers for March-loading shipments were heard at $1,205-1,210/tonne FOB Korea that met bids at $1,185-1,198/tonne FOB Korea.

Boosting the market sentiment in Asia were the gains in US benzene values for prompt January lots to $4.13-4.17/gal, or $1,235-1,246/tonne FOB Barges, on Tuesday.

But this price upturn in the US could just have resulted from pure market play and not backed by fundamentals, traders said.

“It’s a purely trader-driven game. With contract price (CP) [settlement] time approaching, they are busy [push]ing up the prices because many have CP-related sales,” said a Singapore-based trader.

Notwithstanding the rising benzene prices in the US, opportunities for arbitrage trades to the US remained closed on paper, market players said.

The spread between US and Asian benzene values currently stands at $40-41/tonne, still lower than the cost of shipping 6,000-9,000 tonnes of benzene from South Korea to the US Gulf at mid-$50-60/tonne levels.

Benzene supply in Asia is tight in the first quarter due to a slew of plant turnarounds and unplanned shutdowns in South Korea, Japan, Thailand, Indonesia and Singapore, said traders.

This was another key factor pushing up prices in recent weeks, they added.

($1 = €0.79)

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By: Mahua Chakravarty
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