Asia benzene spot prices hit two-month high for July on back of active purchases for July loads despite limited spot availability of Japanese, South Korean lots

LONDON , June 20, 2014 () – On 6 Jun 2014, market players stated that a two-month high increase in Asian spot benzene prices for Jul 2014 occurred on 5 Jun 2014 on the back of active purchases for Jul 2014 loads despite limited spot availability of Japanese and South Korean lots. Long-term market outlook was unclear, with the negative margins for benzene derivatives in China and the poor performance of the major downstream styrene monomer market. Asian spot benzene prices for Jul 2014 loads increased by more than $20/tonne to $1300-1307/tonne free on board (FOB) Korea on 5 Jun 2014, based on ICIS data. On 5 Jun 2014, deals for Jul 2014 loads reached $1300/tonne FOB Korea. A backwardation occurred in deals for Jul 2014 to Aug 2014, which doubled to $36/tonne within three trading days. No spot loads from the largest benzene producer in Japan were available from Jun 2014 to Sep 2014 due to a substantial plant turnaround schedule and decreased production. Benzene production was reduced due to substantial reductions in co-product paraxylene (PX) output. In South Korea, general aromatics production was reduced by using mixed feed with liquefied petroleum gas (LPG), and by a shortage in pygas. This resulted in purchases that were greater than their typical sizes. Previous rampant purchases by China and Taiwan reduced spot loads from Japan and South Korea, despite the fact that only term cargoes are being transported to the US on the back of a closed arbitrage window. According to a trader, upon covering traders' positions, the backwardation amount would drop, indicating the effect of the five new plants coming onstream. On 3 Jun 2014, on-spec production was achieved by Ulsan Aromatics for its benzene plant, which would begin operations in Jun 2014. A 1 M tonnes/y benzene capacity is scheduled to come online between Jul 2014 to Aug 2014.

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