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Market Monitor | May 2017

Benzene prices remain volatile

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 and spot benzene FOB (free on board) Korea prices recovered to $715-725/tonne as of closing of assessment recently, 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 recently, traders grew concerned on whether China would have sufficient requirements to digest regional cargoes, should SM and caprolactam producers adjust operating rates lower.

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. “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.

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