Asia benzene-toluene spread hits more than nine-month high

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SINGAPORE (ICIS)–Asia’s benzene-toluene spread has hit the $220/tonne mark, recording a more-than nine-month high, ICIS data showed on Friday.

The previous time that the spread was at more than $220/tonne was on 5 April 2017, according to the data.

At midday, benzene prices were discussed at $955-970/tonne FOB (free on board) Korea and toluene prices were at $730-755/tonne FOB Korea.

The widening of the spread came as a surprise to some market participants because it had been falling since 2 January, ICIS data showed, amid the strengthening of toluene FOB Korea prices and robust demand from Chinese restocking activities ahead of the Lunar New Year holiday.

Enquiries from Chinese buyers for toluene were also prevalent because of positive importer margins for back-to-back business activity, with import parity of ex-tank prices much higher than CFR China discussions.

However, gains of more than $20/tonne in FOB Korea benzene prices – since 18 January – had a larger impact on the price difference for both products.

Short-covering activities and long position-taking ahead of some benzene unit turnarounds – starting end-February – have bolstered trading sentiment and paved the way for benzene price increases two days in a row, according to market players.

There is still no clarity on when these benzene price increases will cease, but there is skepticism on whether Chinese demand will be able to keep up with FOB Korea price increases.

Meanwhile, as a result of the wider spread, there are strong expectations that both toluene disproportionation (TDP) and selective toluene disproportionation (STDP) units within the region will continue to run at high rates going into the February-March period.

Picture: Container port in Qingdao, Shandong Province, east China (Photogapher: Yun Fanping/Pacific Press via ZUMA Wire/REX/Shutterstock)