SINGAPORE (ICIS)--Asia's benzene market fell below $300/tonne FOB (free on board) Korea this week, in continued volatile trading.
Market participants expect benzene to remain volatile in the near term, given its responsiveness to crude oil.
The spot market staged a rebound last week to above $300/tonne, in tandem with the surge in energy futures. The drop in energy markets this week dragged the benzene market lower, as it takes direction from the oil sector.
“Asia benzene is following the trends in the oil markets,” said a broker in South Korea.
A trade for a June cargo was concluded at $278/tonne FOB Korea today, down from $339/tonne FOB Korea on 24 April, ICIS data showed.
Benzene is used to produce a number of intermediates that are used to create polymers, solvents and detergents.
Meanwhile, the Chinese market appeared to be sole region with some buying momentum as factories and manufacturing activities have ramped up in recent weeks.
A revival in a number of downstream sectors due to the easing of lockdown measures around the coronavirus has stoked demand for benzene.
Deals on a CFR (cost & freight) China basis were ongoing as demand for import cargoes remained firm.
However, shore tank inventories in eastern China continued to march higher towards 200,000 tonnes, as suppliers continued to divert cargoes to the country.
Parcels, ex-Europe and the Middle East, were heard headed towards China as well, as lockdowns in those regions have curbed demand and have resulted in a supply overhang.
Suppliers in southeast Asia were also trying to move more lots into China, as regional demand remained slack with economies still under lockdown.
“It is better to conclude sales on a fixed price compared to a floating basis,” said a trader in Singapore, given that Chinese market import prices command a significant premium over FOB Korea numbers, on which most floating price deals are based.
Focus article by Clive Ong