SINGAPORE (ICIS)--Asia’s benzene market firmed this week in a refreshing change after several months of decline, on hopes of a resolution to the US-China trade war in the near term.Shipping containers at port of Qingdao in China (Source: Sipa Asia/REX/Shutterstock)
Spot prices are continuing their rebound, after strengthening toward the mid-$550/tonne FOB (free on board) Korea levels late last week, backed by gains in upstream crude market.
Brent crude futures increased above $57/bbl this year after tumbling to around $50/bbl in December 2018.
“Sentiment has turned slightly positive as the [US-China] trade talk continues,” a Singapore-based trader said.
Spot benzene prices had tumbled from above $800/tonne FOB (free on board) Korea in the first half of October to the low-$500/tonne FOB Korea levels in early January 2019, ICIS data showed.
Benzene is a base chemical used to make other chemicals like styrene, phenol and caprolactam.
Meanwhile, concerns over long supply and tepid demand continued to plague the market.
Shore tank inventory along eastern China has built over the past several weeks. With the Lunar New Year holidays in early February approaching, demand for chemicals, including benzene is expected to remain soft.
“Supply for this year is expected to remain ample with some new capacities coming up in the region,” said an end-user in southeast Asia.
Already, most end-users have managed to secure better terms for contracts this year as an expected long supply in Asia has swung things in their favour.
“Most users have better discounts for 2019 contracts compared to last year, reflecting the ample supply in Asia,” said a trader in Malaysia.
Some participants remained cautious despite the recent uptick, given the unchanged fundamentals in the market.
“The development of the trade talks will have impact on the market in the near term, otherwise the fundamentals of the market is largely unchanged,” said a southeast Asia-based producer.
Focus article by Clive Ong
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