SINGAPORE (ICIS)--China’s domestic benzene prices continued to rally, bolstering the Asian markets in August, amid the country’s ongoing trade war with the US.
Local prices of benzene increased this week to above Chinese yuan (CNY) 7,200/tonne ($1,047/tonne) ex-tank, up by CNY1,000/tonne or 16% from late June/early July, ICIS data showed.
In Asia, spot prices have risen to above $880/tonne FOB (free on board) Korea in August, from $800/tonne FOB (free on board) Korea in the second half of June, according to the data.
“All this can be traced back to the escalation of the US-China trade war,” a Singapore-based trader said.
The Chinese yuan has depreciated heavily against the US dollar as trade tensions between the world’s two biggest economies heightened.
The weak yuan dampened demand for benzene imports among Chinese buyers, which increasingly turned to domestic cargoes to meet their requirements.
With import appetite reduced, shore tank inventories along eastern China declined in July and August.
The stocks have tumbled to 181,000 tonnes in the first half of August, from a high of 244,200 tonnes in the second half of June.
Further drawdowns are expected in the near term amid inadequate import supply.
China’s third-quarter manufacturing-for-exports season has kicked off, beefing up consumption of chemicals.
Benzene usually benefits from this as it is a base chemical used to make other chemicals such as styrene monomer (SM), phenol and caprolactam.
“Some producers of end-products have ramped up production in order to export goods to the US in August and September, before the tariffs come into force,” said a trader in China.
China’s manufacturing season usually straddles July to October, when finished goods are shipped to the US, among other countries, for the year-end holiday sale.
Meanwhile, the US-China trade war is expected to command the focus of participants in the Asian benzene and other petrochemical markets in the weeks ahead.
“The full impact of the trade war on trade is still unknown and uncertainty will remain high this year,” said a benzene buyer in southeast Asia.
Focus article by Clive Ong
($1 = CNY6.88)
Picture: Container port in Qingdao, Shandong Province, east China (Photographer: Yu Fangping/Pacific Press via ZUMA Wire/REX/Shutterstock)
Click here to view related stories and content on the US-China trade war landing page