Asia benzene poised to soften on more supply, less demand
Sheau Ling Ong
25-Jan-2013
By Ong Sheau Ling
SINGAPORE (ICIS)–Spot benzene prices are Asia is likely to stay soft, as a result of increased supply and weaker demand from the downstream sectors, market players said on Friday.
Several ongoing scheduled shutdowns at the key downstream styrene monomer (SM) facilities across Asia have curtailed demand for benzene and consequently, regional sellers have to seek more material to head to the US – Asia’s largest benzene consumer, they added.
“[Benzene] is in surplus in the Asian side,” a major South Korean aromatics producer said.
The US market opened this week with a soft note, declining for three successive sessions of $0.08/gal or 1.6% before grounding to a halt on Thursday at $4.88-4.92/gal (€3.66-3.69/gal) FOB (free on board) US Gulf, according to ICIS.
Asian sellers said they faced some resistance from their US buyers, delaying February loading, in view of possible downside in prices.
“US has to buy, just that they are waiting for Asia prices to fall further,” a South Korean trader said.
On 25 January mid-day, spot benzene prices were discussed at $1,390-1,405/tonne FOB Korea for February loading, shedding $42.50/tonne or 3% from Monday’s close, ICIS data showed.
Apart from declining prices, market activity also decelerated, traders and brokers said.
“[From Asia to the US], February [loadings] is slower as compared to January,” a Singapore-based shipping broker said.
“It also depends on the vessel availability,” a Singapore-based trader said, adding that Asian supply condition may remain surplus until Asian cargoes resume heading to the US in a regular manner.
Besides the numerous turnarounds at SM plants, its downstream expandable polystyrene (EPS) and unsaturated polyester resins (UPR) sectors will be due to shut from mid-February during the Lunar New Year for at least one week to even a month, traders said.
China will be closed on 9-15 February on account of the Lunar New Year holiday.
“It is the traditional lull season for SM in China, with that benzene demand will be hit,” a Singapore-based trader said.
Although margins of SM producers are healthy, absence of demand down the chain does not justify the SM makers to stock-up benzene, traders said.
On 24 January’s close, spot SM deals were reported at $1,725-1,730/tonne CFR (cost and freight) China for March parcels, according to ICIS.
In other benzene downstream markets such as phenol, margins remained squeezed. The current spread between benzene and phenol will need to rise three times to reach a breakeven level, market players said.
“Benzene producers’ margins have been fantastic. They have the room to reduce offers,” a northeast Asian SM maker said.
The benzene-naphtha spread on 25 January mid-day was at $402/tonne, more than double the breakeven level for Asian integrated aromatics makers, industry players said.
“The market does look a little soft now,” another Singapore-based trader said, adding that from March to June, market will paint a rosy picture with a slew of scheduled maintenance at the BTX (benzene, toluene, xylenes) units in Asia (see table below) .
“It is just the breathing period now. The low prices will be short-lived,” another South Korean trader said.
Shutdown schedule of BTX units in first half of 2013
Company |
Location |
Benzene |
Toluene |
Mixed Xylenes (MX) |
Paraxylene (PX) |
Turnaround period |
Hyundai Cosmo Petrochemical (HCP) |
Daesan, South Korea |
120 |
|
|
380 |
1 month from mid- April |
GS Caltex |
Yeosu, South Korea |
200 |
|
800 |
400 |
1 month from mid-March |
S-Oil |
Onsan(new), South Korea |
300 |
|
|
900 |
1 month in April |
SKGC |
Ulsan, South Korea |
550 |
1000 |
1520 |
350 |
40 days from May |
|
450 | |||||
Fuji Oil |
Chita, Japan |
175 |
|
210 |
|
45-50 days from April |
JX Energy |
Marifu, Japan |
100 |
|
200 |
|
Q2 (reformer) |
Mizushima, Japan |
240 |
140 |
480 |
350 | ||
60 |
230 | |||||
Muroran, Japan |
120 |
|
400 |
| ||
Formosa (FCFC) |
Mai Liao 1, Taiwan |
130 |
|
100 |
270 |
45 days from May |
PCS |
Jurong No 1, Singapore |
100 |
50 |
28 |
|
early June to mid-July |
Aromatics Thailand (PTT) |
Map Ta Phut No 1, Thailand |
460 |
|
|
|
1 month in April (reformer) |
Reliance Industries Ltd (RIL) |
Jamnagar, India |
520 |
|
|
1700-1800 |
April to May (PX) |
($1 = €0.75)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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