Asia’s benzene prices to track declines in US amid poor demand
Sheau Ling Ong
05-Sep-2014
Focus story by
Ong Sheau Ling
SINGAPORE (ICIS)–Asia’s benzene prices will likely continue
to track the declines in the US market after registering
heavy losses amid sluggish downstream demand, market players
said on Friday.
Spot prices on Friday mid-day stood at $1,220-1,223/tonne FOB (free on board) Korea for November cargoes and at $1,225-1,230/tonne FOB Korea for second-half October parcels, down $15-20/tonne from the previous day’s close, according to ICIS.
Benzene prices in the US fell over the trading week to land at $4.35/gal DDP in the US Gulf coast, equivalent to around $1,300/tonne, as of 4 September’s close, traders said.
“Asia continues to follow the US market since there is not much outlet [demand] within Asia,” a Japanese trader said.
The lacklustre performance of the key benzene derivative, styrene monomer (SM), was a main reason for the reduced benzene demand within Asia, they said.
“[The] market is just so weak and the outlook is not getting better,” a South Korean trader said.
A Singapore-based trader added: “The key [to the benzene market] is SM, as long as [SM] does not perform, no way can [the benzene prices] improve”.
Spot November SM deals were $1,505-1,510/tonne CFR (cost and freight) China on Friday morning, ICIS reported.
“Demand is just so bad,” another Singapore-based trader said, adding that despite more than 10 turnarounds scheduled at SM facilities in the September-November period, the SM market may not see support because of prevailing high inventory levels in east China.
“With China still not buying benzene, Asian suppliers have to push more lots to US and this is dampening the market there,” a second South Korean trader said.
In September, about 110,000 tonnes of Asian material will head to the US, with around 80,000 tonnes estimated to be shipped out of South Korea, the trader said.
The volumes seen in November is 26% lower from the levels
seen in August, with final exports to US from South Korea
standing at 108,000 tonnes, according to market
players.
“Although there are vessel delays from August loading [from
South Korea] to September, US demand during the same period
is lesser because of the upcoming downstream turnarounds,” a
South Korean producer said.
Asian producers are likely to be pressured to push out more cargoes to the US going forward, with China unable to follow suit because of poor run rates at benzene derivatives units currently, coupled with several scheduled turnarounds, players said.
Asian supply of the material have increased since July following the start-up of South Korean firm SK Global Chemicals’ (SKGC) two new benzene facilities at Ulsan and Incheon, which are running at 100% and 90% respectively since August.
On top of these two new benzene units a total of 995,000 tonnes/year capacity, two additional new benzene plants – ONGC Mangalore Petrochemical Limited (OMPL) and Jurong Aromatics Corp (JAC) – will keep the supply long, traders said.
OMPL is expected to load its first benzene lot by end of this weekend, while JAC should produce on-spec benzene by early next week, traders added.
“More producers will seek to export to the US since Asia can’t absorb all these new volumes,” a second Singapore-based trader said.
Benzene demand in southeast Asia will shrink drastically for spot October parcels, as downstream units in the region will either be shut for maintenance or running at reduced rates because of insufficient co-feedstock olefins, they said.
“Thai, India and Singapore-originated cargoes may just start to head to the US starting from end September,” a third Singapore-based trader said.
“This is a vicious cycle. Asia sellers have no choice but to dump cargoes into the US…and the US price falls further that will depress the Asian pricing as well,” he said.
Some players in the market said that long-position traders may still fight to support the market, while short-covering activity may emerge if buyers see sufficient price declines.
Meanwhile, several benzene units will also be taken offline for maintenance from September through to the rest of the year, market players said.
However, demand lost from benzene downstream turnaround will
still outstrip the benzene output lost, they added.
Styrene Monomer Turnarounds | |||
Company | Location | Capacity (kt/year) | Scheduled shutdown period/Start-up date |
SKGC | Ulsan, South Korea | 350 | Keep shut in Sep since late Jul |
Tianjin Dagu | Tianjin, China | 500 | 20 Aug to 11 Sep |
Idemitsu Kosan | Tokuyama, Japan | 120, 220 | End-Aug to 20 Oct restart |
Taiyo Oil | Ube, Japan | 370 | 19 Aug to 1 Oct restart |
Formosa Chemical Fibre Corp (FCFC) | Mailiao, Taiwan | 600 | 1 Sep for 45 days |
Idemitsu Styrene | Malaysia | 220 | 18 Aug to 15 Sep restart |
Styrindo Mono Indonesia (SMI) | Merak, Indonesia | 250 | Mid-Sep to end- Nov |
Ellba Eastern | Jurong Island, Singapore | 550 | Early Oct for 50 days |
Qilu Petrochemicals | Qilu, China | 200 | Early Oct for 1 month |
Phenol | |||
Bluestar Harbin Petrochemical | Harbin, China | 120 | 25 Aug for 35 days |
Sinopec Shanghai Gaoqiao | Pudong, China | 37.5, 62.5 | Mid-Sep for 60 days |
Chang Chun | Changshu, China | 300 | Early Oct to end Oct |
Mitsui Chemicals | Chiba, Japan | 190 | Early Oct for 42 days |
LG Chem | Yeosu, South Korea | 300 | 25 Oct to 25 Nov |
Chang Chun (Cumene) | Jurong Island, Singapore | 540 | Early Oct for 45 days |
MDI | |||
Wanhua Chemical | Ningbo, China | 1200 | Oct to Nov |
Nippon Polyurethane (NPU) | Yamaguchi, Japan | 200 | 15 Aug for 40 days |
Benzene Turnarounds | |||
Company | Location | Capacity (kt/year) | Scheduled shutdown |
LG Chem | Yeosu, South Korea | 240 | Mid-Oct for 40 days |
YNCC | Yeosu, South Korea | (No 3) 120 | 10 Sep to 23 Oct restart |
OCI | Yeosu, South Korea | 150 | 10-30 Oct |
Formosa | Mailiao, Taiwan | 450, 60 | H2 Sep for 40-45 days |
CPC Corp | Kaohsiung, Taiwan | 20 | 1-7 Oct |
Pertamina | Cilacap, Indonesia | 120 | End-Aug for 45 days |
ExxonMobil | Jurong Island, Singapore | 340 | Early Oct for one month? |
Aromatics Thailand (PTTGC) | Map Tha Phut, Thailand | 355 | Early-Nov for one month |
Reliance Industries Limited (RIL) | Hazira, India | 210 | End-Sep for four weeks |
Idemitsu Kosan | Tokuyama, Japan | 220 | Sep-Oct |
JX Nippon Oil & Energy | Negishi, Japan | 165 | 2 weeks in early Oct |
Showa Shell | Yokkaichi, Japan | 85 | Mid-Oct to Nov |
Tonen General | Sakai, Japan | 75 | Sep-Oct |
Zhenhai Oil Refinery and Chemical | Ningbo, China | 200 | End-Oct for one month |
China National Offshore Oil Corp (CNOOC) | Huizhou, China | 350 | Oct for 45 days |
Additional repoting by Clive Ong
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