(adds background on GS Caltex plant, SM prices)
SINGAPORE (ICIS)–Spot benzene prices in Asia continued to soar this week, extending gains on concerns over a possible tightening of supply.
On Tuesday, prices rose above $820/tonne FOB (free on board) Korea, up from $745.5/tonne FOB Korea in early August, ICIS data showed.
The shutdown of refineries along the US Gulf due to Hurricane Harvey stoked worries of a supply disruption in the near term.
Asian benzene prices tracked the gains in the US market, given that the US is a regular destination for supplies from South Korea and Japan.
The strong price uptrend in the region caught many players by surprise.
Benzene is used to make styrene, phenol, caprolactam, adipic acid and other chemicals.
Meanwhile, an aromatics facility in South Korea remained off line since it suffered an outage in early August, further reinforcing the view of snug supply.
GS Caltex shut its No 2 reformer unit in Yeosu following a fire incident on 2 August. Its aromatics facility has a benzene capacity of 900,000 tonnes/year, according to ICIS data.
“The market is perceiving that supply will be constrained in the near term,” said a broker in South Korea.
Meanwhile, strength in certain downstream sectors was boosting benzene demand.
In the key downstream styrene monomer (SM) sector, prices have been rising in recent weeks with the approach of the peak manufacturing-for-exports season in China next month.
“Strong SM demand is also bolstering benzene demand and prices,” a Singapore-based trader said.
On 28 August, SM prices surged to $1,305-1,325/tonne CFR (cost and freight) China, up by $45-50/tonne from the previous session, according to ICIS data.
Some end-users of benzene said that demand for the chemical will continue to pick up over the next few weeks into October as downstream plants ramp up production.
“Near-term demand for benzene should be picking up,” said an end-user in China.
Pictured above: A petroleum and chemical plant in Kelamayi, China. (Source: Sipa Press/REX/Shutterstock)