– Benzene-naphtha spread flips back to positive
– Thin CFR China discussions amid VAT reduction
Benchmark FOB Korea laycans in the Asian benzene market rolled forward Tuesday amid a steep $18-$20/mt contango between the April and May. A positive benzene-naphtha spread supported benzene prices, flipping to $20.08/mt Tuesday after being negative last Tuesday and hitting a decade low of minus $18.25/mt the day before. While the price spread between benzene and naphtha has hovered below breakeven levels of around $150/mt since the fourth quarter of last year, sources had earlier said firm paraxylene margins were supporting refinery profits. Demand was thin for CFR China benzene Tuesday, although the East China market was finding its footing after China’s value-added tax was reduced to 13% from 16% on Tuesday in a bid to support the domestic manufacturing economy. In South Korea, benzene exports totaled 236,146 mt in March, up from 230,768 mt in February, latest customs data showed. Exports to the US comprised 29,565 mt or 13% of the total, in line with an annual pick-up in US demand for South Korean benzene in the second quarter. Inventory levels in East China rose 4,000 mt on the week to 247,000 mt Tuesday. This comes amid lower downstream operating rates in China amid reports the government was conducting checks at plants in Jiangsu province after a blast at a chemical plant in Yancheng, Jiangsu, two weeks ago. While an end-date to the checks is not known, market sources said more plants were expected to shut as the checks progressed.
Benzene was assessed up $26.33/mt from Tuesday at $582.33/mt FOB Korea Tuesday amid a laycan rollover. The marker takes the average of the third, fourth and fifth half-month laycans, currently H1 May, H2 May and H1 June. During the Market on Close assessment process, a bid for June loading cargo was last seen at $586/mt FOB Korea by GS Caltex. The H1 May and H2 May laycans were each assessed at $580/mt FOB Korea, narrowing the May/June spread to minus $7/mt, above a bid last seen at minus $8/mt. The H1 June laycan was assessed at $587/mt, above GS Caltex’s bid and below an offer at $589/mt FOB Korea. The CFR China marker was assessed up $9/mt from last Tuesday at $559/mt, tracking gains in domestic East China prices. The East China marker was assessed up Yuan 77/mt over the same period at Yuan 4,360/mt, equating to $562.97/mt on an import parity basis.