FocusAsia benzene poised to soften on more supply, less demand

25 January 2013 06:27  [Source: ICIS news]

By Ong Sheau Ling

Asia benzene is poised to stay softSINGAPORE (ICIS)--Spot benzene prices are Asia is likely to stay soft, as a result of increased supply and weaker demand from the downstream sectors, market players said on Friday.

Several ongoing scheduled shutdowns at the key downstream styrene monomer (SM) facilities across Asia have curtailed demand for benzene and consequently, regional sellers have to seek more material to head to the US – Asia’s largest benzene consumer, they added.

“[Benzene] is in surplus in the Asian side,” a major South Korean aromatics producer said.

The US market opened this week with a soft note, declining for three successive sessions of $0.08/gal or 1.6% before grounding to a halt on Thursday at $4.88-4.92/gal (€3.66-3.69/gal) FOB (free on board) US Gulf, according to ICIS.

Asian sellers said they faced some resistance from their US buyers, delaying February loading, in view of possible downside in prices.

“US has to buy, just that they are waiting for Asia prices to fall further,” a South Korean trader said.

On 25 January mid-day, spot benzene prices were discussed at $1,390-1,405/tonne FOB Korea for February loading, shedding $42.50/tonne or 3% from Monday’s close, ICIS data showed.

Apart from declining prices, market activity also decelerated, traders and brokers said.

“[From Asia to the US], February [loadings] is slower as compared to January,” a Singapore-based shipping broker said.

“It also depends on the vessel availability,” a Singapore-based trader said, adding that Asian supply condition may remain surplus until Asian cargoes resume heading to the US in a regular manner.

Besides the numerous turnarounds at SM plants, its downstream expandable polystyrene (EPS) and unsaturated polyester resins (UPR) sectors will be due to shut from mid-February during the Lunar New Year for at least one week to even a month, traders said.

China will be closed on 9-15 February on account of the Lunar New Year holiday.

“It is the traditional lull season for SM in China, with that benzene demand will be hit,” a Singapore-based trader said.

Although margins of SM producers are healthy, absence of demand down the chain does not justify the SM makers to stock-up benzene, traders said.

On 24 January’s close, spot SM deals were reported at $1,725-1,730/tonne CFR (cost and freight) China for March parcels, according to ICIS.

In other benzene downstream markets such as phenol, margins remained squeezed. The current spread between benzene and phenol will need to rise three times to reach a breakeven level, market players said.

“Benzene producers’ margins have been fantastic. They have the room to reduce offers,” a northeast Asian SM maker said.

The benzene-naphtha spread on 25 January mid-day was at $402/tonne, more than double the breakeven level for Asian integrated aromatics makers, industry players said.

“The market does look a little soft now,” another Singapore-based trader said, adding that from March to June, market will paint a rosy picture with a slew of scheduled maintenance at the BTX (benzene, toluene, xylenes) units in Asia (see table below) .

“It is just the breathing period now. The low prices will be short-lived,” another South Korean trader said.

Shutdown schedule of BTX units in first half of 2013

Company

Location

Benzene

Toluene

Mixed Xylenes (MX)

Paraxylene (PX)

Turnaround period

Hyundai Cosmo Petrochemical (HCP)

Daesan, South Korea

120

 

 

380

1 month from mid- April

GS Caltex

Yeosu, South Korea

200

 

800

400

1 month from mid-March

S-Oil

Onsan(new), South Korea

300

 

 

900

1 month in April

SKGC

Ulsan, South Korea

550

1000

1520

350

40 days from May

 

450

Fuji Oil

Chita, Japan

175

 

210

 

45-50 days from April

JX Energy

Marifu, Japan

100

 

200

 

Q2 (reformer)

Mizushima, Japan

240

140

480

350

60

230

Muroran, Japan

120

 

400

 

Formosa (FCFC)

Mai Liao 1, Taiwan

130

 

100

270

45 days from May

PCS

Jurong No 1, Singapore

100

50

28

 

early June to mid-July

Aromatics Thailand (PTT)

Map Ta Phut No 1, Thailand

460

 

 

 

1 month in April (reformer)

Reliance Industries Ltd (RIL)

Jamnagar, India

520

 

 

1700-1800

April to May (PX)

 
($1 = €0.75)

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


Author: Ong Sheau Ling



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