FocusTight supply to support Asia benzene prices in March to May

25 February 2013 07:17  [Source: ICIS news]

By Ong Sheau Ling

Tight supply to support Asia benzene prices in March to MaySINGAPORE (ICIS)--Spot benzene prices in Asia will likely be supported by tight supply stemming from heavy turnaround schedule at regional aromatics facilities from March to May, industry sources said on Monday.

Lower aromatics production is also being yielded from increased use of liquefied petroleum gas (LPG) – an alternative to expensive naphtha – as feedstock for petrochemical production, further squeezing supply in the region, they said.

At midday, spot benzene prices were at $1,380-1,395/tonne (€1,049-1,060/tonne) FOB (free on board) Korea for May cargoes, largely unchanged compared with last Friday’s close, according to ICIS.

Spot benzene prices on FOB Korea prices were generally on a downtrend since hitting a three-week high of $1,440/tonne on 21 January, as trading typically goes on a lull in the weeks leading to the Lunar New Year holiday, which fell on 9-15 February this year, ICIS data showed. Subdued demand from the key US market further weighed on the Asian benzene market.

In the next three months, a dozen aromatics plants in Asia are due for annual turnarounds, with three major South Korean producers – Lotte Chemical, LG Chem and Yeochun NCC (YNCC) – planning to shut some of their aromatics facilities for up to three weeks in April for catalyst change, industry sources said. (Please see table below)

“Although these turnarounds are planned, loss of production will still affect the spot availability and this will fuel prices,” a South Korean trader said.

Production loss is estimated at about 300,000 tonnes based on the scheduled turnarounds in March to May, market players said.

“Given the large capacity loss, supply will be tight starting from March. Benzene prices will firm,” a South Korean producer said.

In South Korea, which is the largest exporter of benzene in Asia, some production loss will also be incurred from the partial or full feedstock switch from naphtha to LPG at four of its aromatics producers.

Other producers in Asia are building up inventory to cater to their customers’ needs during the turnaround period, industry sources said.

“The turnaround is planned, so certainly we have started to stock up ahead of the shutdown period so that our customers are unaffected,” an Indian producer said.

Benzene prices have no reason to soften heading into March, market players said.

“Besides the tight supply, demand is expected to pick up,” a second South Korean trader said.

Scheduled turnarounds at a few downstream styrene monomer (SM) plants in Asia are due to end by March and April, auguring well for benzene demand, industry players said.

Outside Asia, benzene consumption in the US will also likely to increase because of strong demand for SM, they said.

The price outlook is also upbeat in Europe because of tight supply because of refinery shutdowns and a deliberate reduction in benzene output ahead of  scheduled turnarounds at downstream SM turnarounds in the region, market sources said.

“If crude does not see signs of weakness, and based on the strong likelihood that the overseas markets’ conditions will improve, Asia’s market sentiment will be lifted,” a Singapore-based trader said.

A second trader based in Singapore said: “I am bullish on the outlook.”

In the key China market, however, high stock levels at eastern ports at more than 30,000 tonnes – nearly double before the Lunar New Year holidays – are curtailing demand for spot benzene imports, industry players said.

“I am all covered, up till April even,” a China-based end-user said.

Meanwhile, benzene trades into China and Taiwan are also being hampered by a wide gap in price quotes by buyers and sellers, and by rising freight cost, market players said.

“Offers are too high for us to accept,” a Taiwanese end-user said.

Offers for March or early April shipment into Taiwan were at a premium of $35/tonne over FOB Korea prices, while buying ideas were capped at a premium of $30/tonne, players added.

“If import markets like China and Taiwan are still holding back their purchases, the tight supply may not be looking as so tight anymore,” a Taiwanese aromatics producer said. 

Company

Location

Benzene capacity (‘000 tonnes/year)

Turnaround period

Hyundai Cosmo Petrochemical (HCP)

Daesan, South Korea

120

1 month from mid- April

GS Caltex

Yeosu, South Korea

200

1 month from mid-March

S-Oil

Onsan(new), South Korea

300

1 month in April

SKGC

Ulsan, South Korea

550

40 days from May

Fuji Oil

Chita, Japan

175

45-50 days from April

JX Energy

Muoran

120

1 month from May

Formosa (FCFC)

Mai Liao 1, Taiwan

130

45 days from May

Exxonmobil

Sri Racha, Singapore

320

1 month in April

Aromatics Thailand (PTT)

Map Ta Phut No 1, Thailand

460

1 month in April (reformer)

Reliance Industries Ltd (RIL)

Jamnagar, India

520

(1 line) April to May

Qinzhou Petrochemical

Guangxi Qinzhou, China

350

7 March - 15 April

Qilu Petrochemical

Zibo, Shandong, China

262

15 April - 23 May

 

($1 = €0.76)

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


Author: Ong Sheau Ling



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