Asia benzene buoyed by firm crude oil; outlook clouded by soft demand

Author: Clive Ong

2020/04/07

SINGAPORE (ICIS)--The Asia benzene market remained firm this week after crude oil prices staged a sharp rebound at the end of last week, though the outlook remains uncertain as the coronavirus pandemic has sapped demand for most chemicals across the globe.

Hopes of production cuts by producers at an upcoming meeting spurred oil futures higher, after hitting decade lows a week ago.

The West Texas Intermediates (WTI) futures rose to the high $20s/bbl from 3 April, after dipping below $20/bbl several sessions earlier.

Asia benzene quickly followed suit, with spot prices on an FOB (free on board) Korea rising to above $280/tonne, after falling under $250/tonnne in early April, ICIS data showed.

Benzene is used to produce a number of intermediates that are used to create polymers, solvents and detergents.

“The outlook for benzene remains unclear, despite the recent upswing,” said a trader in Singapore, citing demand destruction from the lockdown of economies worldwide.

The lockdown across countries is expected to last until the end of April or even into May, as countries battle the coronavirus.

Downstream sectors like styrene monomer (SM), phenol, caprolactam and adipic acid showed limited improvement in demand as consumption of finished goods remained in the doldrums.

Export destinations Europe and the US continued to have demand for finished goods as supply chains have been disrupted by the lockdowns.

“Some buying interest from the trade is evident, but not so from end-users,” said a broker in Singapore.

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Focus article by Clive Ong

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