Published on September 9, 2014
Benzene which a component that is derived from coal and petroleum, is also found in other fuels and gasoline products. Benzene which is the value chain of nylon had dropped down its prices on 4th September, 2014 in the Asian and European region mainly due to bearish buying sentiment and also from weak downstream values. On 5th September, 2014 crude oil which is one of the main ingredient of all the petrochemical products had inched down on the back of a rise in the number of jobless reimbursement avers and after a heavy losses amid sluggish downstream demand the prices of Benzene in the Asian market is prone to continue to trail the wane in the US market, according to the market players.
As per the Asian trader, since there is not much demand within Asian region, the region prolongs to follow the US market, however the main reason behind the fall in the Benzene demand within Asian market is due to dreary performance of Styrene Monomer which is the key derivative of Benzene. Moreover prevailing to high inventory levels in East China, the Styrene Monomer market might not seen much support in spite of schedule turnaround of more than 10 units at Styrene Monomer facilities at around September-October periods.
In addition, suppliers from Asian region are likely to push more cargoes to US due to poor run rates at Benzene units coupled with number of planned maintenance turnaround, that is resulting into less of buying Benzene is done from the Chinese market, as a result it is affecting the US market.
According to the researched report, on 5th September, 2014 the spot prices of Benzene had stood at USD 1225-1230/ton FOB Korea for November cargoes and for the second-half of October the spot prices stood at USD 1225-1230/ton FOB Korea, with a fall of USD 15-20/ton in compare to the previous closing price. Moreover the spot prices of Styrene Monomer for November deals were mainly concluded at USD 1505-1510/ton CFR China.
According to the market players and traders, in the month of September, 2014 Asian material around 110,000 tons is likely to head to the US wherein around 80,000 tons have been estimated to be shipped out of South Korea. However with the upcoming downstream turnaround the demand in US market is expected to be less during the period of the delay in the vessels loading from South Korea from August loading to September, 2014.
Furthermore, owing to insufficient co-feedstock olefins the demand of Benzene in the Southeast Asian region will drastically reduce its size for the October cargoes, as downstream plant in the Southeast region will either undergo maintenance turnaround or will be operating at a reduced rate as per the Asian traders. Additionally, from the end of the September, 2014 cargoes originated from India, Thailand and Singapore might start to head towards US.
According to the researched report, South Korean major petrochemical producers SK Global Chemical have commenced their two new Benzene unit located in Incheon and Ulsan and since August, 2014 both the units are operating at 90% and 100%, respectively, following with this since July, 2014 the supply of the Asian materials have inched higher.
Moreover to support the market few market players and traders said that long position traders may still come to blows, whereas if buyers see adequate decline in prices then the short-covering activity might emerge.
Meanwhile, from the month of September onwards most of the Benzene plants has been scheduled to undergo maintenance turnaround throughout the year, however the output loss of the Benzene will still outstrip with the demand lost from the Benzene downstream turnaround.
