13 September 2012 06:17 [Source: ICIS news]
By Jasmine Khoo
At midday, spot benzene prices were assessed at $1,245-1,255/tonne (€971-979/tonne) FOB (free on board)
“It is likely that prices would remain firm, especially since SK Energy is having a turnaround in October. Supply would continue to be tight, maybe until November,” said a northeast Asia-based producer.
South Korean SK Energy is planning to shut its Ulsan-based reformers early next month for 30-45 days of turnaround. The reformers have an estimated total benzene capacity of 470,000 tonnes/year.
In Europe and the US, problems in domestic production may also lead to stronger demand for Asian benzene, further tightening supply in this region.
A window for arbitrage trades to the
For September, some 69,000-70,000 tonnes of benzene from
Northeast Asian benzene producers have either very little inventory left or completely sold-out on cargoes for September and October, market sources said.
Southeast Asian benzene producers, on the other hand, do not have surplus to sell to the spot market, and are just producing enough to fulfil term contracts, they said.
The shortage of prompt benzene cargoes, occurring at a time when crude and naphtha prices are on rise, has heightened speculative trades that have been driving up benzene prices in spite of weak demand.
Benzene demand from major downstream sectors – styrene monomer (SM) and phenol – remains soft, with regional facilities currently operating at an average reduced rate of 70-80%, according to market players.
A northeast Asian-based SM producer complained about squeezed margins as current benzene prices are too high. Rather than risk losses by buying benzene at high prices, the SM producer is more inclined to cut output.
($1 = €0.78)
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