Asia benzene may soften further on weak crude, naphtha values
Dated- 01 Jun , 2012 - Global
Benzene prices in Asia may decline further in the near term driven by the current downtrend seen in upstream crude and naphtha futures, traders and producers said on Friday.
Benzene prices may slip below the psychological $1,000/tonne (€810/tonne) FOB (free on board) Korea mark in the near term, if crude and naphtha futures continue to decline, they added.
“Prices can go below $1,000/tonne FOB Korea…the [naphtha-benzene] spread is still good,” said a key Korean producer.
Naphtha prices in Asia were at $809.50-812.50/tonne CFR (cost and freight) Japan on Friday morning; while benzene prices in Asia were at $1,055-1,070/tonne FOB (free on board) Korea, according to ICIS.
Looking at the current $245.50-257.50/tonne spread from naphtha to benzene, there is room for benzene prices to drop further, they said.
Aromatics producers need a spread of about $150/tonne as the break-even point for production margins.
Spot benzene prices in Asia hit a five-month low on 31 May at $1,055-1,070/tonne FOB Korea, driven down by the downturn in Brent crude futures to $103/bbl.
Prices have plunged by $120-130/tonne in the past one month, mainly driven by a bearish upstream market, players added.
“The market is mainly being driven by crude [these days],” said a second Korean producer.
Meanwhile, benzene supply in Asia was balanced-to-high and demand from the key downstream styrene monomer (SM) sector was stable-to-weak.
Benzene supply was more balanced for June as a number of regional crackers have reduced or are planning to cut operating rates, traders and producers said.
Poor margins for toluene disproportionation (TDP) producers have also forced few units to cut production in recent weeks, resulting in less benzene supply, they added.
Asian benzene exporters were also planning to load about 50,000-60,000 tonnes of benzene for the US in June as the arbitrage window is open at present, said traders.
But demand for benzene from the SM sector could also see some decline in the coming weeks, as some SM producers in the region were planning to cut production due to weak performance in the derivatives styrenics sector, producers added.