Asia benzene firmer after recent plunge, outlook unclear

Source: ICIS News

2018/03/20

SINGAPORE (ICIS)--Asia benzene stabilized this week and started to firm, after steep sell-off last week, but market participants are not sure about a near-term trend because of the volatility since the start of the year.

Sentiment appeared to have become less bearish after crude futures consolidated at above $60/bbl.

A firmer benzene market over in the US helped prop up the FOB (free on board) Korea market this week. Benzene in the US market rose to $3.03-3.05/gal, from $2.95-2.97/gal on Friday, based on bids and offers.

Spot prices fell below $840/tonne FOB Korea last week before rebounding to around $860/tonne FOB Korea this week, ICIS data showed.

This year so far prices have generally been on a down trend since peaking at $951/tonne on 19 January. After falling to $869/tonne on 9 February they climbed back to $908/tonne on 23 February but have fallen since then up till last week.

Sellers in the key Chinese market became less willing to sell late last week as prices continued their downward trend. The reduced selling pressure helped the market to bottom and consolidate.

“Some importers sitting on high-priced material have become less willing to sell, since that would widen their losses,” said a broker in China.

Some traders also anticipate weak buying response even if they lowered prices further. Consequently, sellers were not keen to chase prices lower.

Meanwhile, buyers in China remained largely on the sidelines this week. Most of them showed limited interest to step into the import market.

Elevated inventories along eastern China, at above 170,000 tonnes, after the Lunar New Year prompted buyers to be unhurried. At the same time, buyers who needed some urgent cargoes have mostly turned to domestic cargoes which are priced cheaper than imported ones.

Benzene is a base chemical used to produce other chemicals like styrene monomer, phenol and caprolactam.

Meanwhile, a recovery in the key downstream styrene monomer (SM) market this week, with spot prices rising back above $1,300/tonne CFR (cost & freight) China provided a boost to benzene values.

“A recovery in SM and stable phenol prices appeared to have supported benzene prices as well,” said a trader in China.

The toluene-benzene spread hovered at around $166.5/tonne for the week ended 16 March.

The highest figure for this year was at $208.5/tonne in mid January while the lowest was at $154/tonne in mid February.

Typically, producers of benzene using disproportionation method require a spread of around $100/tonne for the process to be viable.

ICIS Editorial Chart goes here

Focus article by Clive Ong