Updated to mid-November 2009
Asian market review by Sheau Ling Ong, ICIS pricing
Benzene spot prices in Asia fluctuated from $820/tonne FOB (free on board) Korea in mid-August to $735/tonne FOB Korea at the end of September, tracking crude values. However, benzene rose steadily from October to mid-November to reach $843/tonne FOB Korea on the back of bullish crude futures, stronger buying interests and cuts in operating rates across most parts of Asia.
As the naphtha-paraxylene (PX) spread narrowed since October, many Asian producers had resorted to productions cutbacks of their aromatics units by 5-20%. Japan has started importing benzene due to snug supply, while China, a net exporter since July, has reduced its export volume. Consequently, Asia had less surplus.
The market was in contango for most of the period as players expected potentially an improved global market. Moreover, east-to-west arbitrage would open from late November. Sellers reiterated that due to weak key downstream styrene monomer (SM) demand, they had to export benzene out of Asia to maintain the regional balance.
European market review by Madelon Ten Cate, ICIS pricing
European benzene contract prices declined heavily in the third quarter of 2009, as domestic supply lengthened, arbitrages to other regions closed and downstream demand remained weak albeit steady.
The September contract price reflected the first drop of the year, down a staggering €168/tonne or $217/tonne from August. October saw a further reduction in contract pricing, at minus €71/tonne or $94/tonne from September. November saw a slight increase of €42/tonne or $75/tonne as some domestic production issues and low water levels on the river Rhine had pushed spot values up.
Throughout most of the three-month period up to mid-November 2009, spot prices hovered around either side of the $800/tonne mark, depending mainly on supply issues and not on demand. Various arbitrage opportunities and some production constraints influenced price movements heavily up, although some sudden lack of buying interest had also pushed values slightly down a bit.
In mid November, values for both November and December were pegged flat around $820-840/tonne CIF (cost, insurance and freight) ARA (Amsterdam, Rotterdam, Antwerp), while a steep contango was noted into January.
US market review by Landon Feller, ICIS pricing
Benzene contract values in the US Gulf (USG) fell by a total of 105 cents/gal or 29% from August to October, but regained nearly 24% of this loss in November. Contract levels closely followed spot markets, which reflected this same cost-driven dip-and-rise but were also plagued by thin trading and the resulting volatility.
Spot benzene values dropped as low as the mid-$2.50s/gal in early October, when NYMEX WTI crude oil drifted near $70/bbl and refinery rates dropped to around 81% amid scheduled maintenance turnarounds. By 9 November benzene bids were near contract levels at $2.80/gal FOB USG, against offers near $2.92/gal same terms.
Supply remained tight through the period as anticipated imports from Asia were delayed in September and October. Producers increased offers rapidly when trades in other regions threatened to open arbitrage out of the US Gulf.
Market sources widely expected firm and steady benzene pricing into December, as crude oil values looked set to remain stable above $75/bbl.
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Benzene
Uses and Outlook
Benzene is the largest-volume aromatic used to produce a number of petrochemical intermediates such as ethylbenzene for styrene production, cumene for phenol and acetone, cyclohexane and nitrobenzene.
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The traditional method of manufacturing benzene from the distillation of light oils produced during the manufacture of coke has been overtaken by a number of processes. The main sources now are from catalytic reforming or steam cracking of liquid petroleum feedstocks, as well as the hydrodealkylation (HDA) of toluene and toluene disproportionation (TDP).
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