APIC’13: Asia to export less benzene to US on closed arbitrage window

09 May 2013 10:09  [Source: ICIS news]

TAIPEI (ICIS)--Asia benzene exports continued to fall in May, as the arbitrage window to the US remained firmly shut, market players said on Thursday.

About 9,000 tonnes of cargo of South Korean origin and 15,000 tonnes of Japanese cargoes will be delivered to the US in May, the sources said at the sidelines at the annual Asian Petrochemical Industry Conference (APIC).

“Only one South Korean and one Japanese producer is exporting to the US this month for their contracts. Others have the option to skip since the spread is not workable at all,” one of the producers said.

APIC 2013 is taking place in Taiwan’s capital, Taipei, on 9-10 May.

The price spread between Asia and the US was barely positive in April to early May, they added, citing that a price gap of at least $50/tonne (€38/tonne) is needed to cover the freight cost of $60-65/tonne for a 15,000-tonne vessel, traders and producers said.

For 9 May’s mid-day assessment, the prices of spot May and June cargoes were at $1,230-1,300/tonne FOB (free on board) Korea, while spot prompt cargoes booked in the US Gulf were at $4.38-4.42/gal FOB, showing a price gap of $20-60/tonne, according to ICIS.

South Korean exports to the US slumped by 58% month on month in May, while Japanese exports fell by 17% during the same time frame, industry players said.

In April, close to 50,000 tonnes were exported to the US, they added.

“Tanks in the US are full. There is no demand to seek for spot cargoes outside,” a regional trader said.

Some players estimated about 350,000 tonnes of benzene were imported by the US from January to April this year. This amount is close to the country’s annual import requirement.

“Hefty imports have arrived previously that caused the inventories in the US to stay high,” another trader said.

“Producers [in Asia] have no choice but to avoid exports to the US given the negligible price spread [between Asia and the US],” a second producer said.

($1 = €0.76)

Author: Ong Sheau Ling

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