SINGAPORE (ICIS)--Asia's benzene market remains on a downtrend partly as a result of slump in the crude oil futures, while market participants expect supply to remain ample for the rest of this year.Image by Shutterstock
With Saudi oil production headed toward normalcy after recent attacks, concerns over a supply crunch have eased.
Weak US manufacturing data added further downward pressure on the crude markets with Brent crude futures slipping below $59/bbl.
Over in Asia, trade slowed down as China kicked off its week-long National Day holidays on 1 October.
Demand for benzene is expected to be tepid this week with Chinese buyers out of the market.
Spot prices of benzene declined to below $700/tonne FOB (free on board) Korea this week, from $751/tonne FOB Korea on 17 September.
Some participants expect demand to remain modest post holidays as the US-China trade tensions appeared to be rising again.
“Heightened uncertainty is causing participants to be cautious,” said a trader in Taiwan.
Benzene is used to produce a number of intermediates that are used to create polymers, solvents and detergents.
The Asia-US spot arbitrage window, which opened up in April this year, has largely closed as snug supply conditions in the US have eased.
“Some loadings for H2 October have been declared but November cargoes seem limited,” said a broker in South Korea commenting on the scarcity of November cargoes bound for the US.
Consequently, availability in the region is expected to increase while demand could potential ease in a traditionally slower fourth quarter.
Talk of two new facilities in Southeast Asia possibly having material to sell in late October and November further stoked speculation that supply might become ample in the near term.
The two facilities are Malaysia’s oil major PETRONAS’ Pengerang Refirnery and Petrochemical (PRef-Chem) benzene unit of 160,000 tonnes/year capacity in Johor and Brunei Hengyi Petrochemical’s 500,000 tonne/year unit in Pulau Muara Besar.
Focus article by Clive Ong