FocusAsia benzene up 6.6% despite weak market

23 September 2008 04:51  [Source: ICIS news]

By Mahua Chakravarty

SINGAPORE (ICIS news)--Asia’s benzene values have risen 6.6% since late last week on higher crude values despite persistent weakness in market fundamentals, traders said on Tuesday.

Prices have risen steadily in the last three trading sessions with the maximum increases seen on Monday.

The gains, which have totalled to $65-70/tonne since 19 September have come mainly on the back of a rise in crude values from about $98/bbl late last week to $109/bbl on Tuesday morning.

Sentiment was more upbeat on Tuesday morning with the overnight surge in crude values. A Singapore-based trader said that he expected bids to rise further.

Bids were heard at $1,110-1,115/tonne FOB (free on board) Korea for November loading around mid-day, $10-15/tonne higher than levels seen at the start of trades. No offers could be located.

Benzene values have increased recently despite persisting weak demand from the downstream styrene monomer (SM) segment, which has been affected by a slowdown in the key Chinese styrenics market.

Benzene inventory levels had been high since July due to weak demand. However, prices have not decreased due to efforts by producers to reduce operating rates, and by heavy exports to the US, said traders.

“Supply may not be as long as before as [number of] plants have lowered their production due to poor margins,” a South Korean trader said.

And, due to an open arbitrage window from Asia to the US, exports were likely to draw down inventory further, traders added.

“About 120,000 tonnes of benzene has been exported between August and September,” said the Singapore-based trader. He added that as the arbitrage window was open discussions for more fixtures to be shipped in October could be underway.

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Author: Mahua Chakravarty
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