Asian Benzene Update
Asian benzene hits more than 2-year high on prompt China demand, limited spot supply
Singapore (Platts)–11 Jan 2017 306 am EST/806 GMT
The FOB Korea benzene marker surged $102/mt, or 12.4% week on week, to be assessed at a 25-month high of $926/mt Tuesday, amid firm Chinese demand and few spot availability in the FOB Korea market.
It was last assessed any higher at $972/mt FOB Korea on November 27, 2014, according to S&P Global Platts data.
Benzene prices in Asia have been hovering below $700/mt through most of 2016, climbing above $900/mt only once in December at $910/mt on December 8, 2016, and averaging at $641.58/mt FOB Korea in 2016, according to Platts data. The surge in prices over the past month has been driven mainly by firm demand for prompt cargoes in China, as deliveries were delayed due to tight vessel availability and bad weather conditions at the main discharge ports in East China.
Benzene prices in East China’s domestic market were last heard at Yuan 7,800-7,900/mt ($944.04-$956.14/mt) Tuesday, up from Yuan 7,100-7,200/mt ($862.23-$874.37/mt) last Tuesday.
Inventory levels in East China’s onshore tanks were heard to be at around 33,500 mt on January 6 — much lower than the typical 80,000-100,000 mt seen for most of 2016.
This prompted traders to seek more February and March loading material as they anticipated Chinese import demand would sustain even after the Lunar New Year holidays amid positive downstream margins.
The surge in buying interest, however, could not be met by supply as several traders had already allocated their spot cargoes in term contracts, while Northeast Asian producers were holding back on making spot offers, waiting for prices to peak.
Some sources, though, were less bullish about the domestic China market as an estimated 200,000 mt of Northeast Asian benzene and over 20,000 mt of deepsea-origin benzene were expected to arrive from second-half January onwards.
But for the current week, the upsurge in FOB Korea benzene prices was expected to remain even if China stopped taking in cargoes, as the FOB US Gulf Coast prices were rising which could open the arbitrage from East.
FOB USG Q2 benzene price rose 7 cents from Monday, but jumped 46 cents week on week to be assessed at 322 cents/gallon Tuesday, or $962.78/mt.
Tighter supply and a closed arbitrage to the US from the East had pushed the FOB USG marker to hit a 25-month high on Tuesday, Platts data showed.
But whether the East-West arbitrage window would open up remained uncertain, as downstream styrene monomer plants in the US were heard to be scheduled for consecutive turnarounds in the first-quarter of 2017.
–Genevieve Soong, firstname.lastname@example.org
–Edited by Haripriya Banerjee, email@example.com