FocusChina benzene imports surge; downstream start-ups to sap supply

26 April 2013 07:14  [Source: ICIS news]

By Helen Han and Viola Pan

China portSINGAPORE (ICIS)--China needs to continue importing strong volumes of benzene throughout the year, with a massive downstream capacity starting up that will soak up the country’s supply of the aromatics product, industry sources said on Friday.

For the full year, the country is expected to procure 700,000 tonnes of imported benzene, about 60% higher compared with 2012 levels, as domestic demand is projected to hit 9.59m tonnes, they said.

In the first three months of 2013, China’s aggregate benzene imports surged 62.7% year on year to 190,400 tonnes, with March volumes recording a near-sevenfold increase to 83,555 tonnes, official data showed.

China’s current domestic benzene production stands at 9.09m tonnes and is projected to increase to 10.4m tonnes by the end of the year, industry sources said.

Market players are upbeat about a strong pick-up in Chinese demand. Some 1.88m tonnes/year in new domestic capacity downstream of benzene – mainly caprolactam (capro) and adipic acid – will come on stream from June onwards.

Four capro plants, with a combined capacity of 700,000 tonnes/year, are due to start operations mostly in the second half of the year, according to data collated by Chemease, an ICIS service in China. Incremental adipic acid capacity, on the other hand, will be 370,000 tonnes from three new facilities. (Please see table)

Two other downstream plants - a facility that will produce 300,00 tonnes/year of phenol and 185,000 tonnes/year of acetone, and a 320,000 tonne/year styrene monomer (SM) plant - are expected to come on stream in May-June.

Domestic benzene prices in China have started rising in April after declining by about 11% in March given a strong outlook in demand as current high inventory is expected to be easily used up in the coming months. Import prices were also on the rise this month because of heavy volumes being procured, industry sources said.

On 25 April, domestic benzene prices were assessed at yuan (CNY) 9,500/tonne ($1,540/tonne) ex-tank east China, while import prices were at $1,330-1,340/tonne (€1,024-1,032/tonne) CFR (cost and freight) China, according to Chemease and ICIS data, respectively.

Meanwhile, benzene producers in Asia are welcoming China’s strong demand as it provides them an alternative outlet for volumes that could not be shipped to the US, where the window for arbitrage trades is closed.

With US demand currently weak, benzene prices in the US market were not much higher than in Asia that the resulting price spread is insufficient to cover the sea freight, which is at least $55/tonne, market sources said.

“I had sold quite a lot of cargoes for March and April into China since I can’t sell much to the US,” a South Korean aromatics major said.

In March, South Korea exported 31,114 tonnes of benzene to China, representing a 55% jump from its February volumes to its neighbouring country, according the China Customs.

Southeast Asian benzene producers were also rerouting some benzene cargoes to China given weak demand from their usual market, the Middle East, where a major downstream SM facility is down.

China received 32,908 tonnes of benzene from southeast Asia in March, more than triple the volume shipped out by the region in the previous month, official data showed.

Product

Name

New capacity'000 tonne/year

Start-up Date

SM

SP Chemicals

320

June,2013

Phenol

Chang Chun Chemical (Jiangsu)

300

May,2013

Acetone

Chang Chun Chemical (Jiangsu)

185

May,2013

Caprolactam

Luxi Chemical Group

200

June,2013

Caprolactam

Hubei Sanning Chemical

100

June,2013

Caprolactam

Nanjing DSM Dongfang Chemical

200

Q3 2013

Caprolactam

Shijiazhuang Chemical Fiber

200

second half of 2013

Adipic acid

Shandong Hongye Chemical

140

June,2013

Adipic acid

Hebei Kailuan Energy Chemical

150

The end of 2013

Adipic acid

Zhejiang Shuyang Chemical

80

June,2013

 
Additional reporting by Ong Sheau Ling

($1 = €0.77 / $1 = CNY6.17)

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


By: Helen Han



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