Asian benzene flipped to a $1/mt premium to toluene on Tuesday from a discount of $5.50/mt the day before on rising benzene exports to the US.
Benzene started trading at a discount on August 4. The discount was at its deepest for 23 months on August 8 at $39/mt, but prices have been rising since then.
The FOB Korea toluene marker was assessed at $1,117/mt on Tuesday, up $13.50 from Monday, while the FOB Korea benzene marker was assessed at $1,118/mt, up $20 from Monday.
One of the reasons behind the higher benzene price was the movement of cargoes to the US. Market participants in Asia said about 50,000 mt of benzene will be shipped in August and up to 100,000 mt in September. Typically, the US is a major market for South Korean benzene, as the latter is oversupplied and the US is the chief market that can absorb the excess.
Benzene needs to be at a premium of $100-120/mt to toluene for operators of toluene disproportionation and hydrodealkylation units for breakeven, meaning the premium has to rise considerably before TDP and HDA operators restart their units or increase operating rates.
In Japan, JX Nippon Oil & Energy, which had cut runs at its Mizushima TDP unit to about 70% on July 18 after a fire at a refinery at the same site, has kept runs reduced due to the unfavorable spread.
The TDP unit is scheduled to be shut for a 45-day turnaround from early September, and runs will be raised only after that, a company source said.
The unit has a nameplate capacity of 90,000 mt/year of benzene and 100,000 mt/year of isomer-grade mixed xylenes.
JX also operates another TDP unit at Chita, which has been shut since July 8-9 because of the poor economics.
The TDP unit can deliver 100,000 mt/year of benzene and 100,000 mt/year of isomer-grade mixed xylenes.
If the premium rises, the company can restart the Chita unit as early as the end of September.
Since July, Japan's Maruzen Petrochemical has also cut production rates at its HDA unit at Ichibara, Chiba, to about 50% of its 130,000 mt/year benzene capacity, from about 100% earlier.
