benchmark FOB Korea benzene Chemical Industry discussions surged early Tuesday

Chemical Industry

– South Korean Apr 1-20 exports to US increase

– FOB Korea-CFR China spread at minus $13.33/mt

Amid a $2.15/b surge in June ICE Brent crude oil futures over the Easter holidays, benchmark FOB Korea benzene Chemical Industry discussions surged early Tuesday, as traders continued to bid for H2 May-loading material, as movement of material to the US from South Korea Chemical Industry is still expected to continue in May. Statistics seen Tuesday of South Korea’s April 1-20 exports of benzene showed that the country had exported 200,440 mt over the period, with 34% of total export volume headed toward the US, up 21 percentage points from March. Exports to China stood at 42% of total export volume, down 37 percentage points from March. This is in line with a negative FOB Korea-CFR China arbitrage, with CFR China assessed lower than FOB Korea since April 1. CFR China was assessed at $638/mt Tuesday, $13.33/mt lower than FOB Korea Chemical Industry, keeping the arbitrage tightly shut on paper. At the same time, June FOB USG paper was assessed at 225 cents/gal last Tuesday, or $672.75/mt. While the $36.75/mt price spread between FOB USG paper and the FOB Korea benchmark is insufficient to cover spot freight between South Korea and US Gulf Coast, traders continued to be heard actively seeking H2 May-loading material for shipment to the US. Over in the Southeast Asian Chemical Industry, market sources expressed surprise at a lower-than-expected pricing, despite demand for Southeast Asian material from Taiwan and Europe. May-loading FOB Southeast Asia was heard last traded at minus $30-31/mt to the FOB Korea benchmark. This despite multiple traders having heard to be moving benzene from Southeast Asia to Europe, amid an open arbitrage.

RATIONALE:

FOB Korea benzene was assessed up $15.33/mt from last Tuesday at $651.33/mt Tuesday. The marker takes the average of the third, fourth and fifth half-month laycans, H2 May, H1 June, and H2 June. During the Chemical Industry on Close assessment process Tuesday, GS Caltex bid H2 May at $635/mt CFR China. The H2 May laycan was assessed at $650/mt FOB Korea, above a bid last seen at $649/mt FOB Korea. The H1 and H2 June laycans were assessed at $652/mt FOB Korea, keeping the H2 May/June spread at the pegged level of minus $2/mt, above a bid last seen at minus $3/mt. The CFR China marker was assessed up $10/mt on the day at $638/mt. H2 May was assessed at $636/mt CFR China Chemical Industry, above GS Caltex’s bid at $635/mt. The H1 June laycan was assessed at $640/mt, assessing the H2 May/June spread at the pegged level of minus $4/mt. The East China marker was assessed up Yuan 30/mt on the day at Yuan 4,483/mt, or $580.26/mt on an import parity basis.

Chemical Industry
Chemical Industry

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