Price and market trends: Asia benzene shifts away from US; cargoes flow to China, Taiwan

06 June 2014 10:07 Source:ICIS Chemical Business

Benzene supply in Asia is limited due to shortage of feedstocks, and as facilities are running at low capacity

Benzene suppliers in Asia have been diverting cargoes for June loading to China and Taiwan, away from the US, where opportunities for arbitrage trades have closed, market players said on 30 May.

The price gap of benzene in the Asian and US markets in May has narrowed to less than $50/tonne, insufficient to cover the typical freight rates of $55/tonne for a 15,000-tonne lot, they said.

The price difference has widened to $95-203/tonne, with midday prices in Asia on 30 May assessed at $1,285-1,287/tonne FOB (free on board) Korea for June cargoes, while US benzene was at $4.37-4.45/gal FOB overnight, according to ICIS. “Nobody is sure how long this gap will sustain,” a Singapore-based trader said.

The US is a traditional market for Asian benzene, with monthly benzene shipments averaging 100,000 tonnes in the first four months of the year. In April, the volume peaked at 150,000 tonnes, traders said. In May, the volume of Asia’s benzene exports to the US declined to 80,000 tonnes after vessel delays and cancellations, and a lower volume is estimated for June shipment, in view of poor margins.

June-loading cargoes bound for the US will include about 30,000-40,000 tonnes from South Korea; 20,000 tonnes hailing from Japan and around 10,000 tonnes benzene of Indian origin, the traders said. Total June benzene cargoes to the US may still change, they said.

The Chinese and Taiwanese markets, meanwhile, have been absorbing the spot benzene cargoes that could not be moved to the US, market sources said.

China and Taiwan are actively seeking June and July benzene cargoes since the beginning of May because of lower domestic supplies, which prompted repeated hikes in the domestic list prices of the aromatics product in China, they said.

Benzene supply in Asia is limited due to shortage of feedstock pyrolysis gasoline (pygas), and as facilities in Taiwan and China are running at low capacity in view of poor margins of co-product paraxylene (PX), they said.

Taiwan’s CPC Corp intends to keep its two toluene disproportionation (TDP) units shut in June, while its no 6 aromatics unit had a turnaround from 21-30 May. June and July benzene fixtures were done at $1,255-1,290/tonne CFR (cost and freight) China/Taiwan during the month of May, according to ICIS.

Buying interest in China grew following a series of price hikes issued by domestic petrochemical major Sinopec, according to Chinese players.

By Ong Sheau Ling