Asia’s benzene prices will be supported at current levels and could even rise as supply of the aromatics material remains tight in the northeastern and southeastern parts of the region, market participants said on Thursday.
Regional producers currently have limited cargoes for November and December shipments, but gains in prices may be capped by weak demand, they said.
At noon, benzene prices were trading at $1,270-1,290/tonne (€965-980/tonne) FOB (free on board) Korea, unchanged from Wednesday’s close, according to ICIS.
Buyers with urgent need and those seeking to cover short positions are placing higher bids, market sources said.
Two deals for November-loading cargoes were fixed at $1,290/tonne FOB Korea on 17 October, $35/tonne higher compared with last week’s bids at $1,255/tonne FOB Korea, market sources said.
“The supply situation in [South] Korea is very, very tight, said a South Korea-based producer.
SK Energy is currently conducting scheduled turnaround at its reformers in Ulsan, South Korea, that have a total benzene capacity of 420,000 tonnes/year. The reformers are expected to resume production in early November.
“Most makers in South Korea have no more November-loading spot cargoes in their inventories, or maybe, [they have] one or two cargoes left,” the producer said.
Chinese buyers are seeking benzene imports as domestic supply is scarce given ongoing turnarounds and unplanned shutdowns at local facilities.
Benzene inventory in eastern China is estimated at around 8,000-9,000 tonnes on 11 October, barely a third of what is considered as a healthy level of 30,000 tonnes, market sources said.
Demand for prompt lots is strong but most producers are not in the position to fulfil all buying enquiries.
“It is a good chance to make profits, but unfortunately, we don’t have the cargoes to sell on spot basis,” said a northeast Asia-based producer.
Downstream, supply of styrene monomer (SM) is also tight, leading to spikes in prices.
SM, which is the largest end-user of benzene, is expected to remain on an uptrend although demand from downstream styrenics sector remained tepid.
“The current margins for benzene and SM are not favourable, and the actual downstream demand is weak,” said a northeast Asia-based SM producer.
“Logically, it makes more sense to adjust production rates than to purchase benzene now and risk making losses eventually,” the producer said.