FocusAsia benzene plummets to four-month low on US market

14 May 2012 09:23  [Source: ICIS news]

By Mahua Chakravarty

SINGAPORE (ICIS)--Asia’s benzene prices could decline further in coming days after touching a four-month low on Monday morning as a result of a downturn in US benzene prices late last Friday, regional market participants said.

Benzene spot prices were assessed at $1,120-1,140/tonne (€862-878/tonne) FOB Korea, $45-55/tonne lower than closing prices on 11 May and the lowest seen since 5 January 2012, according to ICIS.

Weaker crude and naphtha futures, a downtrend in US benzene market, along with weak market fundamentals in Asia are the key factors to the continuing slide in prices here, market participants said.

Discussions plummeted with bids for second half June loading heard on Monday morning at $1,135/tonne FOB Korea.

An offer for second half June at $1,145/tonne FOB Korea met bids at $1,120/tonne FOB Korea.

Sentiment was bearish in Asia on Monday following a decline in US benzene prices last Friday to $4.03-4.08/gal or $1,205-1,220/tonne FOB Barges, traders added.

Following today’s downturn in Asian prices, the arbitrage window was wide open as he US-Asia benzene price spread was $80-85/tone.

Asia is a net exporter of benzene to the US, and the freight costs for shipping 6,000-9,000 tonnes of the material were about $50-55/tonne.

Another factor pushing sentiment lower was weaker naphtha futures at $929.50-932.50/tonne CFR Japan, said a regional trader.

“If you look at the spread with naphtha, there is still room to go down further,” the trader said referring to the recent decline in naphtha prices and the current $190.50-207.50/tonne spread between benzene and naphtha.

The aromatics producers consider a spread of about $140-150/tonne from naphtha to benzene, toluene and MX as the break-even point for production margins.

Benzene prices have been on a steady downtrend since 4 May 2012, when prices were at $1,200-1,205/tonne FOB Korea.

Benzene supply in northeast Asia is high at present, and this is a factor which has maintained pressure on the market, said market participants.

Demand from the downstream styrene monomer (SM) sector is also stable-to-weak, and near-term expectations about SM are bearish due to a poor derivatives styrenics sector, they added.

($1 = €0.77)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Mahua Chakravarty
+65 6780 4359



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