SINGAPORE (ICIS)--Spot benzene prices in Asia were volatile in the week ended 12 May as a result of uncertain outlook caused by downstream buyers staying on the sidelines, market players said on Monday.
Spot benzene FOB (free on board) Korea prices recovered to $715-725/tonne as of closing of assessment on Friday, after dipping close to $700/tonne on Tuesday.
Fluctuations in benzene prices were largely due to a lack of clarity in demand from the US and key China market.
China demand has been sporadic since late April, with only few buyers from the caprolactam sector entering the market when prices fell sharply.
Buyers from other downstream sectors like styrene monomer (SM) and methyl di-p-phenylene isocyanate (MDI) stayed by the sidelines as they moved into the turnaround season in April and May.
With key downstream SM and caprolactam prices extending losses in the week, traders grew concerned on whether China would have sufficient requirements to digest regional cargoes, should SM and caprolactam producers adjust operating rates lower.
SM prices were at $1,030-1,035/tonne CFR (cost & freight) China as of closing on Friday after dipping in the early week.
Caprolactam prices were at $1,650-1,700/tonne CFR NE Asia in the week ended 10 May, down $70/tonne week on week.
Some Chinese benzene traders bought cargoes on CFR China basis and sold on RMB basis because RMB prices were still comparatively higher that import market.
Sinopec adjusted benzene list prices down in the week to CNY 6,000/tonne ex-works on 10 May.
The list price of CNY6,000/tonne ex-works translates to an equivalent import parity of $731/tonne CFR (cost & freight) China, LC at sight or around $740/tonne CFR China, LC 90 days, taking into account an exchange rate of $1 against CNY6.91.
“[Benzene] Buyers could be tempted to make purchases if prices move towards $700/tonne CFR [NE Asia] levels,” said a northeast Asia buyer.
Spot benzene CFR China prices were at $735-745/tonne as of closing of assessment on Friday.
“Fundamentals are weak, currently supply is low and demand is low, there is no urgency to buy or sell,” said a Japanese trader.
Turnarounds at producer’s plants in Korea and Japan starting from April have cushioned prices from falling lower, reducing inventory pressure at supplier’s side.
Also, arbitrage to the US reopened in the week ended 5 May after it was shut since October last year, with US benzene prices strengthening because of the return of two major SM units that were shut over there.
Some market players expect around 60,000 tonnes estimated to be shipped from South Korea to the US in May.
Around 23,703 tonnes of benzene from Korea was exported to US in April, according to market sources.
Top image: 3D molecular model of benzene molecular ring?xml:namespace>Photographer Cultura/REX/Shutterstock
Focus article by Daphne Ho