FocusChina benzene may stay high throughout March on tight supply

14 March 2012 06:38  [Source: ICIS news]

By Crystal Zhao

SINGAPORE (ICIS)--China’s domestic benzene prices are likely to stay firm this month on limited supply, as some aromatics facilities in the country are either shut or currently running at reduced capacity, industry sources said on Wednesday.

Benzene supply in east China will be shaved by an estimated 43,700 tonnes in March because of maintenance at three plants, while average run rates at aromatics facilities nationwide stand at 70%, they said.

In January and February, China's monthly benzene output exceeded 500,000 tonnes, according to Chemease, an ICIS service in China.

 On Wednesday morning, offers for spot benzene were at yuan (CNY) 8,550-8,600/tonne ($1,350-1,359/tonne) ex-tank in east China, unchanged from Tuesday’s close.

Current prices are on average CNY125/tonne higher, or up 1.5%, from the start of March, according to Chemease, and ICIS service in China.

“The prices in the near future are likely to stay firm, in light of limited supply,” a market player said.

Last week, China’s state-owned petrochemical major Sinopec had raised its benzene offers by CNY100/tonne to CNY8,700/tonne EXW in east China, and implemented a bigger price hike of CNY150/tonne to CNY8,750/tonne EXW in north China, according to company sources.

Among the companies that shut aromatics production in eastern China for maintenance, which extends up to this month, include Zhenhai Refining & Chemical Co (ZRCC), Sinopec Shanghai Petrochemical and Gaoqiao Petrochemical – all subsidiaries of China’s state-owned petrochemical giant Sinopec.

ZRCC’s No 1 aromatics unit at Ningbo with a benzene capacity of 220,000 tonnes/year has been shut since 19 February and will be down for 40-50 days.

At Sinopec Shanghai Petrochemical’s aromatics facility that can produce 270,000 tonnes/year of benzene, a 30-day maintenance is also underway since end-February, said a company source.

Gaoqiao Petrochemical, meanwhile, restarted its aromatics unit with a 30,000 tonne/year benzene capacity in early March after a 30-day turnaround.

In northwestern China, Urumqi Petrochemical has further reduced its run rate at its aromatics unit that can produce 375,000 tonne/year of benzene capacity to 60% this month, from 70% in February, a company source said.

Benzene demand is China is projected to grow slightly in March to 657,400 tonne, up around 2% from February, according to Chemease.

Buyers in downstream sectors – including styrene monomer, phenol, caprolactam (capro) and acrylic acid (AA), methyl di-p-phenylene isocyanate (MDI) – remain cautious about procuring feedstock for production given overall weakness in demand for end-products, industry sources said.

($1 = CNY6.33)

By: Crystal Zhao

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