Asia benzene declines after recent surge; China demand in focus
Clive Ong
27-Mar-2019
SINGAPORE (ICIS)–Asia’s benzene prices weakened after a recent strong performance as market attention returned to weak Chinese demand.
Tonghai Port Area of Nantong Port, Jiangsu, China (Source: Imagine China/REX/Shutterstock)Spot prices for May cargoes have declined to under $600/tonne FOB (free on board) Korea, from last week’s $640/tonne FOB Korea.
Regional benzene prices were driven higher last week by strong gains in US aromatics prices following tank fires and chemicals leak at Intercontinental Terminals Company’s (ITC) facility in the US Gulf coast.
A storage tank at ITC’s Deer Park facility in La Porte, Texas, caught fire on 17 March, spreading to several tanks containing toluene, xylenes, naphtha, gasoline blendstocks and base oils used to make machine lubricants.
The fire was extinguished on 20 March, but a containment wall was breached, and chemicals leaked into a drainage ditch that led to the partial closure of the Houston Ship Channel.
However, US prices started to pull back from their heights, which caused Asia values to decline as well.
Market players’ attention have since reverted back to the tepid demand in the key Chinese market, where inventories along the eastern region shore tanks have bulged to more than 230,000 tonnes.
“Ample stocks in China is weighing on domestic values,” said a trader in China.
Benzene is a base chemical used to make other chemicals like styrene monomer (SM), phenol and caprolactam.
Meanwhile, downstream production in China’s eastern province of Jiangsu is being hit by the launch of government-led safety inspections at plants across the province following a fatal chemical plant blast in Yancheng on 21 March.
“Some chemical plants have reduced run rates in a bid to reduce inventories ahead of the inspection,” said another trader in China.
Consequently, market participants expect a tapering off in demand for benzene in the near term as output for chemicals decline amid plant shutdowns or output cuts.
“There is an increase in uncertainty in [benzene] demand over the past week on top of the US-China trade war,” said a producer in southeast Asia.
The US-China trade talks remained ongoing with no concrete resolution out so far, keeping market players cautious.
Focus article by Clive Ong
Click here to view related stories and content on the US-China trade war topic page
Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Contact us
Partnering with ICIS unlocks a vision of a future you can trust and achieve. We leverage our unrivalled network of industry experts to deliver a comprehensive market view based on independent and reliable data, insight and analytics.
Contact us to learn how we can support you as you transact today and plan for tomorrow.