Asian Benzene (Chemical Industry) – Prices fall as buying interest wanes

Chemical Industry

– FOB Korea down $5.67/mt, CFR China down $4/mt

– Sinopec raises domestic benzene price by Yuan 100

FOB Korea Chemical Industry  prices were down Wednesday for the first time since March 28, with firm pricing in the US having supported demand for FOB Korea material, as traders were keen to work the South Korea-US arbitrage. While availability of supply was limited Wednesday, offers emerged Wednesday amid the downtrend in prices. June FOB USG prices stood at 229 cents/gal Wednesday, $684.71/mt, and the price spread between the US and FOB Korea prices stood at $47.71/mt Wednesday. The price spread is down $6.83/mt on the week, and down $17.54/mt from two weeks ago, signaling a narrowing arbitrage opportunity for traders in the Chemical Industry. Over in the CFR China market, East China market participants were heard not keen to procure material above $600/mt CFR China, while firmer bids were seen from international traders. Domestic prices provided little support to CFR China, with May East China material assessed at Yuan 4,530/mt, or $585.36/mt on an import parity basis, resulting in a price gap of $34.64/mt between domestic and import material. China Petroleum & Chemical Corporation, or Sinopec, a major Chinese benzene producer increased its domestic ex-tank price by Yuan 100/mt, a company source said Wednesday. The listed price for domestic East China benzene was revised to Yuan 4,350/mt from Yuan 4,250/mt. The new listed price equates to approximately $562.10/mt on an import parity basis, based on an exchange rate of 6.7055. In other news, Chemical Industry participants continued to mull the effect of the explosion and subsequent fire at Taiwan’s Formosa Chemicals and Fibre Corp.’s No. 3 aromatics plant at Mailiao on Sunday. The No. 3 plant has the capacity to produce 640,000 mt/year of benzene, which feeds into multiple downstream units producing phenol and styrene. While both downstream plants are scheduled for maintenance in Q2, buying interest from Taiwanese end-users was heard, with queries for material for May and June delivery. While some Chemical Industry sources said that the plant could be shut for one-two months, others said that this was not confirmed. While the reason for the fire and explosion is under investigation, a Chemical Industry source said that no known damage to the unit was heard.

RATIONALE:

FOB Korea benzene was assessed down $5.67/mt on the day at $631.33/mt Wednesday. The marker takes the average of the third, fourth and fifth half-month laycans, H1 May, H2 May and H1 June. During the Wednesday Chemical Industry on Close assessment process Wednesday, no transparent bids or offers were seen. The H1 and H2 May laycans were assessed at $632/mt FOB Korea, below an offer last seen at $633/mt FOB Korea. The H1 June laycan was assessed at $630/mt FOB Korea, between a bid and offer last seen at $627/mt and $633/mt FOB Korea, respectively. June was also assessed at a backwardation of $2/mt to the May laycans, below a May/June offer last seen at plus $3/mt. The CFR China Chemical Industry was assessed at $620/mt Wednesday, down $4/mt on the day, tracking falls in FOB Korea and in the East China Chemical Industry. Buy ideas were last heard at $600/mt CFR China. The East China marker was assessed down Yuan 43/mt on the day at Yuan 4,497/mt, or $581.06/mt on an import parity basis.

Chemical Industry
Chemical Industry

 

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