Petrochemicals: Asia ups benzene exports to US

26 March 2012 00:00  [Source: ICB]

Asia's benzene exports to the US in March are expected to exceed the 50,000 tonne mark as the ­arbitrage window opens.

The region will load more than its regular shipment of about 40,00050,000 tonnes this month, amid weak conditions in its downstream styrene market.

bumpy road Rex Features

 © Rex Features

US refiners are preparing for improved consumption during the summer driving season

Industry estimates suggest that nearly 50,000 tonnes of benzene was loaded from South Korea and bound for US shores between March 114.

US benzene prices were $45-67/tonne (€34-51/tonne) higher than Asia at $4.08-4.17/gal or $1,220-1,247/tonne FOB (free on board) Barges on March 15.

The following morning, Asian spot benzene was at $1,175-1,180/tonne FOB Korea, having dropped by $15-20/tonne for the second consecutive week. .

With several styrene facilities in Asia expected to be shut for maintenance in March and April, demand for benzene may be in for a further slowdown, some market players said.

US EXPECTATIONS

Market participants in the US ­believe that about 60,000 tonnes of Asian benzene is scheduled to arrive during March. A US styrene producer said: "60,000 is the normal import quantity needed under standard North American demand profile."

The producer added that with cracker shutdowns in Europe and low refinery rates, it would not be surprised if the arbitrage opened to Europe and cleaned up supply in North America.

"We are net benzene buyers here in the US; the imports will be easily absorbed into the markets," said another styrene producer. "If it's an overdose of supply, then the market will sit on it. But, business is picking up as we come into the March and April time frame."

Aromatics sources said they expect demand to improve in March and April as refiners stock up in preparation for the US summer driving season, which could push prices higher. They added that the expected arrival of benzene from Asia would meet just a portion of demand.

LOW MARGINS FORCE REDUCED OPERATIONS AT SINGAPORE PLANT

Petrochemical Corporation of Singapore (PCS) has reduced production of benzene, toluene and solvent xylene (BTX) from its two Jurong Island-based plants since February because of poor production margins, a company source said.

Operating rates at the two units were slashed to about 80% from the second half of February, he said. The two plants combined produce 270,000 tonnes/year benzene, 140,000 tonnes/year toluene and 78,000 tonnes/year solvent xylene. PCS has limited spot volumes of toluene for its customers in the Southeast Asia region as a result of the production cuts, sources said.

"The [production] economics do not make any sense," said the source at PCS.

BTX margins for cracker operators are under pressure at present, with some producers in Northeast Asia also mulling production cuts, market sources added.

On March 15, BTX price spreads to feedstock naphtha were below the required $140-150/tonne (€106-114/tonne) for aromatics producers to break even.

The benzene-to-naphtha spread stood at $83-91/tonne, while ­toluene-naphtha and solvent xylene-naphtha spreads were at $123-136/tonne and $133-141/tonne, respectively.

  • Additional reporting by Brian Balboa in Houston

Author: Elaine Burridge and Mahua Chakravarty



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