– Domestic prices fall below CFR China
– Wide bid-offer gap in CFR China discussions
Benzene discussions moved lower Wednesday, extending falls from Wednesday, as persistent bearish sentiment across the styrenics chain encouraged sellers to emerge. The weak sentiment was largely driven by news of China’s Hengli refinery having achieved on-specification production of paraxylene. According to company documents shown to potential offtakers, Hengli’s marketing of methanol was to start as early as January, followed by benzene in March, with polyolefins, styrenics and olefins following through the rest of the year. While benzene had yet to be on-specification, sources with knowledge of the matter said it would be “soon.” With a capacity of 970,000 mt/year, the start-up of the plant would result in more supply of benzene in an already-long market. Trade sources also noted that Hengli had started sooner than the market had anticipated, and news that the plant would soon be commercially producing benzene had greatly affected domestic prices since the start of the week. East China prompt prices were assessed lower by Yuan 180/mt day on day at Yuan 4,500/mt, or $567.29/mt on an import parity basis, while April material was assessed lower by Yuan 180/mt over the same period at Yuan 4,520/mt ($584.94/mt). Prices on an import parity level for April material were lower than CFR China offers by $25.06/mt, with buyers of import material were on the sidelines amid the downtrend. The best bid for H2 April cargo was heard at $600/mt, against an offer at $610/mt CFR China. The wide bid-offer spread brought further negotiations to a standstill. In the FOB Korea market, falling domestic East China prices contributed to bearish sentiment, as sellers emerged on a FOB Korea basis, as opposed to on a CFR China basis.
FOB Korea benzene was assessed lower by $10.50/mt day on day at $597/mt Wednesday. The marker takes the average of the third, fourth and fifth half-month laycans, namely H2 April, H1 May, and H2 May. During the Market on Close assessment process, no fully transparent bids and offers were seen. The H2 April laycan was assessed at the pegged level of $583/mt FOB Korea, below an offer last seen at $587/mt FOB Korea. The H1 and H2 May laycans were assessed at the pegged level of $604/mt FOB Korea, above a bid last seen at $590/mt. The CFR China marker was assessed lower by $13/mt day on day at $603.50/mt, with H2 April heard offered at $610/mt CFR China, while bid levels were below $600/mt. The East China marker was assessed lower by Yuan 180/mt day on day at Yuan 4,507/mt, or $573.18/mt on an import parity basis.